The sale of Magnetic MRO to a Chinese company will produce a change of direction in the business.
At the start of 2018, it was announced that Magnetic MRO, based in Tallinn, Estonia, had been acquired by Guangzhou Hangxin Aviation Technology (Hangxin) for €100 million following the sale of 100 per cent of the shares by the previous major shareholder, private equity firm BaltCap, together with minority shareholders.
Hangxin was established in 1994 and has five main core businesses: component MRO, airborne equipment R&D, aviation test equipment R&D, aircraft retrofit programmes, and aircraft data analysis and application. It serves over 50 airlines in Asia, Middle East, Europe and North America.
Magnetic MRO CEO Risto Mäeots said at the time: “Magnetic MRO management has been actively looking for opportunities to expand into Asia, the highest growth market in aviation. Hangxin, with its existing geographical presence and service portfolio, is complementary to Magnetic MRO, creating substantial synergies and new business opportunities.”
He adds that there is a lot of money available for investment in aviation from some parts of the world and there is an appetite for aviation. Magnetic’s knowledge and experience made it an attractive partner.
He also says the company had to diversify, as the previous concept of MRO – a C check in a hangar – is changing and now represents only 22 per cent of the company’s turnover. Instead, there is a need to grow into new areas such as aircraft and engine spares trading. In fact, the company is actively looking at mergers and acquisitions.
This diversity is reflected the company’s subsidiaries. Magnetic Parts Trading is a joint venture with Crestline Investors. This was formed at the end of 2017 with the acquisition of a package of four Boeing 737-800 airframes and ten CFM56-7B engines.
Crestline Investors provides the majority of capital needs, whereas Magnetic MRO acts as the exclusive asset manager. He says the business will grow organically, especially with PBH contracts for smaller airlines, which get overlooked by larger organisation like AJW Group and AAR. He expects the customer base to grow from eight airlines to 20.
EngineStands24, another joint venture, this time with Kühne + Nagel, was formed in 2016 and specialises in the lease, trading, logistics and storage of aerospace engine stands. These include CFM56-3, CFM56-5A/B, CFM56-5C, CFM56-7B, CF6-80 and V2500, with CF34-8, CF34-10 and LEAP-1A/B to be added in the near future.
It has a hub in Amsterdam but will add Dubai in 1Q19, and is looking at further locations in the US and Southeast Asia. Customers can use an online tracking system to monitor progress.
Finally, MAC Interiors was acquired in 2016. Subsequent investment has improved the company’s capabilities, and in early 2018, it was able to act project manager for the full cabin modification of a Boeing 767 of Med-View Airline of Nigeria.
The project started with a galley refurbishment but then expanded to the design of the full concept; lavatory updates; installation of surveillance cameras and lighting throughout the entire cabin; production and installation of carpets, curtains and new dividers; stowage installation; GPS installation; and modification of all business, premium economy and economy class seats.
There is a possibility that these skills could be passed on to Guangzhou. He is also interested in aligning with the OEMs, such as Boeing’s Gold Care and the FHS-TSP programme from Airbus, while the line maintenance business will expand into widebodies.
Diversity can also be seen from some of the projects it has carried out for customers. The first involvement with the Airbus A320neo Family was a seat modification project supported by company’s EASA approved DOA services. Unfortunately, it was for Primera Air, which ceased operating in October.
These projects can work across several areas of the company simultaneously. In August, it provided a full delivery support of Boeing 737-800 (MSN 32604) to Go2Sky of the Slovakia.
The aircraft was previously operated by Hainan Airlines and was delivered to a Go2Sky with a fresh EASA Airworthiness Review Certificates (ARC) recommendation, requiring 16 years of Chinese operations and maintenance documents to be checked.
The entire transformation process took place in Tallinn and included painting, DOA, CAMO, interior workshop, line and base maintenance backing, as well as seat shop support together with MAC Interiors.
Similarly, Magnetic MRO provided full asset management support for Magnetic Parts Trading, which had purchased an Airbus A320 (MSN1413), in order to upgrade and deliver the aircraft to SmartLynx Airlines of Estonia.
This involved building up a complete aircraft history, reviewing records and restoring back-to-birth traceability of crucial components, as well as going through major maintenance work packs. The project resulted in successfully issuing an ARC recommendation for an aircraft with a complicated history.
In parallel, DOA support included livery design, LOPA, emergency exit lighting, floor cover change and PC Card Quick Access Recorder deactivation.
However, base maintenance has not been overlooked. There have been two major contract wins: it will provide 23 heavy maintenance checks on Airbus A320neo aircraft for SAS from autumn 2018 to winter 2020, while Austrian Airlines will take up 75 per cent of all hangar slots for Airbus A320 Family work during the 2019/2020 winter season.
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