Friday, July 3, 2009

First Southwest aircraft goes south for Maintenace

Southwest Airlines, the nation's leading discount carrier flying only domestic routes, has begun heavy maintenance of some of its Boeing 737 fleet in El Salvador, company executives said Thursday.

Under agreements with its Aircraft Mechanics Fraternal Association (AMFA), Southwest on Wednesday flew its first 737 to Aeroman, an El Salvador-based maintenance, repair and overhaul facility. The MRO is at El Salvador International Airport, outside the capital of San Salvador. The flight originated in Houston, company officials said. Southwest spokesman Fred Flaningan said the downtime could be 30 to 40 days per aircraft.

Southwest, which flies 539 Boeing 737s, also maintains aircraft at an in-house facility at its base at Love Field in Dallas and at three third-party MROs: ATS in Everett, Wash.; AAR in Indianapolis, Ind.; and PEMCO in Tampa, Fla. Although company executives and industry analysts said Aeroman is well qualified to perform Southwest's heavy maintenance, the fact the carrier is outsourcing maintenance to a foreign MRO is at odds with its offbeat, independent image, officials said.

"This is a competitive business," said Michael Boyd, president of Boyd Group International, an Evergreen, Colo., airline consultant. "Southwest is under tremendous cost and revenue pressure, and they are going to look at places that can do the work most inexpensively. "But just because the work is being done in El Salvador doesn't mean it won't be done well. I'm not worried about Southwest not vetting these people — they didn't get them out of the Yellow Pages." Louie Key, national director of AMFA, the union representing Southwest's aircraft mechanics, said the four-year contract ratified by the membership in January permits Southwest to outsource to foreign MROs no more than "four lines of maintenance."

A line of maintenance is a nose-to-tail aircraft overhaul in a particular hangar, he said. "Previously, there were no limitations," Key said. "We were between a rock and a hard place." The AMFA contract also specifies Southwest must retain its in-house maintenance facilities at Love Field, Midway Airport in Chicago, Houston's William P. Hobby Airport and Phoenix Sky Harbor Airport. Southwest's recent offer of an early-buyout program for veteran employees is indicative of the cost pressures in the airline industry, Key said. "It's all about cost per available seat-mile," Key said. "Now that they are maturing as a company, their cost per available seat-mile is getting up there with the legacy carriers."

In the first quarter, Southwest's cost per available seat-mile was 9.96 cents, up 2.8 percent from 2008's first quarter. American Airlines, which has twice as many employees as Southwest's 35,000 workers, had a cost per available seat-mile of 11.8 cents in the first quarter, down 6.5 percent from last year's first quarter. Southwest's fuel hedging also is hurting its bottom line, Boyd said. Southwest saved several billion dollars this decade by buying forward fuel contracts at low prices. But the fuel-hedging contracts began to turn against the Dallas carrier when oil prices plummeted in mid-2008. As a result, Southwest had to write down the value of its hedges, leading to losses in 2008's third and fourth quarters.

Aeroman, San Salvador, El SalvadorEstablished: 1983 as subsidiary of TACA, El Salvador’s national airline. Certified: 1992 by Federal Aviation Administration as commercial aircraft maintenance, repair and overhaul base. Also certified by the Authority of Civil Aviation of El Salvador and by the General Directorates of Civil Aviation in mexico, Guatemala, Costa rica, Panama, Ecuador, Peru and Jamaica. Facilities: 294,541 square feet of hangar, shop, administration and storage space.

Two hangars capable of enclosing six narrowbody commercial aircraft at same time. Employees: 1,500 aviation maintenance technicians, engineers, support and administrative workers. Capabilities: heavy airframe maintenance; six-year and 12-year maintenance; structural modifications and repairs; aging fleet service bulletins and modifications; avionics modifications; and in-flight entertainment system installations and modifications.

Engine overhaul and repair of General Electric/Snecma (France) CFm56; Pratt & Whitney JT8D; International Aero Engines V2500 and rolls-royce rB211. Aircraft serviced: Airbus A320; Boeing 727, 737, 757 and 767.

Customers: JetBlue Airways, US Airways, Southwest Airlines and Central and South American airlines

(Tulsa World)

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