Lufthansa Technik AG: Company Strategy & Performance Analysis
Lufthansa Technik AG was established in 1994. It is a subsidiary of Deutsche Lufthansa AG. The company focuses mainly on the maintenance, repair and overhaul business segment. Lufthansa Technik undertakes the overhaul of a wide body aircraft, fittings for government and private aircraft, and the maintenance of engines, equipment and components. Its network represents 22 companies including Hawker Pacific Aerospace, Lufthansa Technik AERO Alzey GmbH, Lufthansa Technik Budapest, and Lufthansa Technik Malta.
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Strategic contracts and agreements to generate significant business for the company
Lufthansa Technik has been continuously securing new contracts and agreements to enable the company to improve its performance and expand its customer base. In July 2017, the company entered into a long-term agreement with the Israeli airline EL AL Israel Airlines Ltd. The contract covers the global supply of prompt component services for the airline’s Boeing 787 fleet. This agreement will strengthen the cooperative partnership between Israel's airlines and Lufthansa Technik. In the same month, the company entered into an agreement with The Royal Jordanian Airlines Plc to provide component maintenance services. In March 2017, Parker Aerospace and Lufthansa Technik announced an agreement which covers the long-term collaboration of the two companies regarding component MRO services for the Airbus A350. The agreement will help increase component and systems reliability and reduce related maintenance costs for airline customers worldwide.
Strong expertise in commercial MRO services
Lufthansa Technik leverages its specialised MRO services to drive its revenue stream. The company has cultivated a strong brand image in terms of providing reliable, state-of-the-art MRO services to its customers across the globe. It offers its comprehensive range of services through its seven service units, which include maintenance, overhaul, component services, engine services, VIP services, and landing gear services. The company offers its services through contracts which can cover anything from a single aircraft to an entire fleet. It also operates its maintenance services at 60 airports around the world. This has enabled the company to post robust growth in terms of revenue. For instance, the company’s revenues from external customers increased from US$3,599.6 million in 2015 to US$3,882.2 million in 2016, reflecting 8.0% growth.
Increased orders from external customers contributed to growth in the segment
An increase in new orders has enabled the company to post significant growth in the segment. For instance, in 2016, the company secured 42 new customers with 456 new contracts. Growth in the Asia-Pacific and American regions has also contributed to growth in the segment. Furthermore, the company’s expansion initiatives supplemented growth. For example, in 2016, Lufthansa Technik opened another overhaul line in Puerto Rico.
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