Delta leaders say strong MRO business should offset revenue downturn

MINNEAPOLIS–Delta Airlines’ maintenance repair and overhaul (MRO) business–which comprises avionics to engines–is growing each year and should offset some of the company’s losses resulting from the current economic downturn, says Steve Gorman, executive vice president and chief operating officer for Delta Airlines.

By John McHale

MINNEAPOLIS–Delta Airlines’ maintenance repair and overhaul (MRO) business–which comprises avionics to engines–is growing each year and should offset some of the company’s losses resulting from the current economic downturn, says Steve Gorman, executive vice president and chief operating officer for Delta Airlines.

Gorman made his remarks during the keynote address at the Avionics Maintenance Conference (AMC), run by the ARINC standards organization, in Minneapolis earlier this year. Delta’s MRO business grew from about $240 million in 2005 to about $500 million last year, Gorman says.

Delta has begun performing MRO for the CFM 56-5 aircraft engine, which is flown on Airbus jets. Gorman says the CFM-56-5 business alone could bring about $250 million a year. The engine is made by CFM International–a joint venture of GE Aviation and Snecma, in Evandale, Ohio.

This opportunity came through last year’s merger with Northwest Airlines, which has Airbus vehicles in its fleet, Gorman says. Delta also works on many avionics components as part of their operation such as weather radar, cockpit displays, traffic alert and collision avoidance system (TCAS), etc., he notes.

Gorman was named to his current position last year to help run the combined entity of Northwest and Delta. The Delta brand is slowly being spread across the Northwest fleet, but this will take time, he says. Eventually all elements of Northwest will be assimilated into the Delta fold, Gorman adds.

The official term for the process is single operating certification (SOC). So far Delta has certified 75 percent of its operations with the Federal Aviation Administration (FAA), Gorman says.

The goal of SOC is to have all elements of both airlines be interchangeable, such as pilots, flight attendants, flight operations, control centers, and airport operations, Gorman says. In other words, the two airlines become one in the eyes of the FAA by having one set of policies for all elements of the organization–not one set for Delta and one for Northwest.

Delta is also looking to take advantage of Northwest’s success with baggage handling, Gorman says. Northwest is at the top of the industry in this category while Delta is near the bottom, he continues.

Northwest has state-of-the art tracking software and scanners while Delta has just started adding modern baggage scanners recently, Gorman says.

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