Hong Kong Aircraft Engineering Co. Ltd. (HAECO): Company Strategy & Performance Analysis
Hong Kong Aircraft Engineering Co. Ltd. (HAECO) offers line services, airframe services, component services, inventory technical management, engine services, fleet technical management, private jet solutions, cabin solutions, freighter conversions, technical training, and part manufacturing.
It operates through 17 joint ventures and subsidiaries that include HAECO Hong Kong, HAECO Americas, HAECO Xiamen and TEXL. Its Airframe services include airframe maintenance, cabin reconfiguration, structural modification, freighter conversion fulfilment, as well as line services covering transit checks and certification, defect clearance, cabin management, and ramp services. It also provides 24/7 aircraft-on-ground support across Asia and the US. Its component services include component repair and overhaul services for hydraulic, mechanical, avionics and pneumatic systems. The company generated 35.2% of its total revenue from Airframe Services.
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Increased man-hours sold for airframe services resulted in revenue growth
HAECO - Hong Kong segment offers airframe services, component services, line services, fleet technical management and material management. The segment’s revenue increased at 6.8% from US$468.0 million in FY2015 to US$499.8 million in FY2016. The increase in the revenue was attributed to increases in line service aircraft movements. For instance, the average number of aircraft movements handled per day increased to 307 in 2016, an increase of 1.3%. The segment is anticipated to see further growth in revenues in 2017, due to higher demand for airframe services and line services.
Strong demand for airframe services and acquisition of TIMCO led to revenue growth
HAECO - Americas segment offers line services, airframe services, engine overhaul services, manufacturing of seats and cabin interior components, and other cabin services. The segment reported a 10.9% increase in revenues from US$329.5 million in FY2015 to US$365.4 million in FY2016. The increase in the revenue was primarily driven by the increase in demand for airframe services and gains from the acquisition of TIMCO. Also, the number of manhours sold in the airframe service category increased from 3.02 million in 2015 to 3.24 million in 2016. The segment is expected to post further revenue growth with the increase in demand for maintenance and repair service.
Less work performed for a major North American customer contributed to the decline in manhours
The segment offers line services, airframe services, private jet work, technical training, and part manufacturing. The segment revenue declined at -4.3% from US$220.9 million in 2015 to US$211.3 million in 2016. The decline in revenue was due to a reduction of man-hours sold. This was attributed to the lower amount of work performed for a major North American customer. Also, disruption of production, due to a typhoon, affected performance. The company expects the segment’s revenue to increase during the forecast period, due to the focus on acquiring more customers outside North America.
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