In this exclusive interview, Keith Mwanalushi, Editor at AviTrader Publications speaks exclusively to AerFin's James Bennett about his current role and how the company is navigating its way through the current climate.
What attracted you to this business?
Bennett: First and foremost, it was the ambition of the business. I had previously worked with the CEO, Bob James, and with his illustrious track record knew that this was a company heading places. When I joined in 2016, the AerFin story was already making waves in the industry so to be part of that upward trajectory was a no-brainer! That, coupled with what is a unique aftermarket service offering underpinned by technical expertise as distinct from being just another parts provider, was instrumental in my coming on board.
What does a typical day’s work entail in your job?
Bennett: Being responsible for both the group sales and marketing and the P&L of the engine division makes for a hugely varied set of responsibilities. Operationally, departmental meetings are held daily to review the team’s objectives, from updates on business opportunities being progressed, proposal reviews and contract discussions. We also have a daily leadership forum with the CEO to discuss key departmental highlights and ensure communication flow to and from all areas of the business is clear and consistent. From an engine division customer centric standpoint, we have a series of metrics that are reviewed on a daily, weekly and monthly basis all around ensuring optimum customer satisfaction. These include but are not limited to quality, on time delivery of repair and customer orders, RFQ response timelines and quotation/documentation accuracy. These are regularly reviewed with our customers to ensure that a) we’re delivering to expectations and b) that the criteria we’re using meets their requirements. In addition, revenue and margin forecast reviews are undertaken to ensure we’re meeting our commitments to our shareholders. Away from the operational and into the strategic, a company that grows from strength to strength in the way AerFin has can only be successful with a clear vision. In the leadership team, our role is to ensure we have a coherent, achievable strategic plan for future growth. Our marketing plan has to reflect that strategy. From market positioning to new product / market identification and associated campaigns, there’s a huge amount of day to day work that goes into ensuring AerFin retains and grows its brand.
What is the most challenging part of your job?
Bennett: The AerFin business model looks very different today than it did in 2010. Any business that has grown at the rate that AerFin has will naturally have to manage a lot of change. Not always an easy task. Which is why it’s critical to bring your team with you on the journey and have them fully invested. As I’ve already mentioned, clear communication across the business is vital, and ensuring everyone has challenging yet achievable KPIs is key both in terms of motivation and company expectation. I’m delighted that both retention of colleagues and attracting talent to the business has been made a lot easier using this approach. Of course, as we work through 2020, navigating the challenges of COVID has added another set of challenges.
Briefly, tell us about the range of aftermarket support AerFin provides.
Bennett: AerFin is an aftermarket solutions specialist, focussed on delivering cost-saving sustainable solutions to our global airline, MRO, OEM, as well as asset management and leasing customer-base. We deliver a complete breadth of nose-to-tail solutions to our customers, which ranges from flighthour-agreement programmes, engine material supply programmes, engine leasing and trading as well as an array of inventory pooling and exchange programmes. This is of course not withstanding our recent expansion into the engine MRO segment, where we work with our preferred partners to deliver a scope of engine MRO services from our 150,000 Sq. Ft EASA P145 facility in the UK, underpinned by our EASA P145 accreditation.
How has COVID-19 affected the business?
Bennett: The immediate impact has been on supply of material into our MRO partners, noting that the majority of operators have been looking to avoid all but essential repair activity as part of efforts to preserve liquidity. However, we have seen an uptick in RFQ activity as these MROs start to ramp-up operations and airlines begin returning to the skies. In addition, conserving cash is going to be critical for all so the medium to long term outlook is extremely positive for increased used serviceable material consumption. Engine green-time leasing demand has been buoyant as operators seek cost-efficient short-term lease solutions to help support aircraft fleets return to service, whilst also avoiding potentially costly maintenance events. As mentioned, demand for engine MRO service solutions and storage programmes has also remained strong throughout the pandemic. AerFin has been working with a number of our preferred partners to develop comprehensive engine MRO and storage solutions out of our 150,000 sq. Ft. EASA 145 accredited UK facility. Lastly, we also work with a number of cargo operators. That market has been very buoyant during the periods of lock-down, and that demand looks set to continue. So overall, though we’ve seen some short-term challenges, the medium to long term forecast looks strong for us given our platform focus, embedded relationships with airlines, MROs, OEMs and lessors alike, and our flexible technical solutions.
Embraer E-Jet aftermarket support has been an important area for AerFin.
Are you looking at opportunities to progress to the E2? Bennett: Although there is a long-term strategy for the business to transition towards supporting next-generation product lines such as the E2, our current focus lies with supporting current product lines across the E-Jet, narrow body as well as wide body segments. This is where our technical and commercial expertise is focussed. It is where we are able to deliver the most value to our customers and partners through our continued experience of maximising asset residual values and delivering the most commercially and environmentally sustainable solutions to our global customer base.
AerFin recently expanded its U.S. business development team. What is the key focus now for business development in the Americas?
Bennett: The Americas is a key strategic growth area for the business. With over 30% of the global fleet operating in North America it is clearly a very mature and competitive marketplace with many aftermarket and MRO players as well as a much more consolidated airline customer base than Europe or APAC. However, AerFin is approaching the market with a long-term strategy in mind, bringing a new range of services to the airline customer-base which focusses on reducing airline’s maintenance costs, whilst ensuring we maintain a world-class level of customer service. Whilst the narrow body market will of course be a huge focus for AerFin, it goes without saying that the significant E-Jet customer base in the region will be a particular focus for AerFin, especially when you consider that almost 70% of all global E-Jets are operating in the Americas. One of our key investments in 2017 was the acquisition of 15 E175s from Saudia. Not only does this make AerFin the largest stockist of E-Jet inventory outside of Embraer themselves but it’s proven to be the springboard for a long term airframe component support service offering (Beyond.Pool™), engine and major asset lease services, repair management and engine component solutions. The E-Jet product is less mature than the A320ceo and 737NG market, with fewer alternative solutions for airlines looking to minimise airframe and engine maintenance costs. However, with this vast volume of inventory, coupled with our extensive experience of delivering technically and commercially bespoke solutions to our existing E-Jet operator-base, AerFin is bringing to the region a range of alternative maintenance solutions for E-Jet and CF34 operators.
What are the key benefits for airlines looking for a tailored component flight hour solution, especially smaller regional carriers?
Bennett: The extent to which an airline benefits from a component Flight Hour (FH) solution is largely down to the component support partner that it selects for the programme. Although the headline benefits of a flight hour programme such as delivering cost certainty, avoiding heavy investment in inventory and reducing strain on internal airline resources, are fairly consistent throughout the market – the true benefits of a FH solution are very much in the operational and commercial detail of each individual partnership. AerFin’s leadership and senior management team have extensive experience of working in technical and supply chain divisions for airlines across the world. They therefore know first-hand the frustrations. of selecting the wrong component solution partner and therefore perfectly positioned to understand which FH solution is optimally tailored to the airline on both a commercial and operational level. AerFin’s Beyond.Pool™ FH component solution focusses on delivering a customised solution that is entirely bespoke to the airline and its budgetary and operational requirements. These factors are becoming increasingly important for airlines, not least as we try to navigate the unpredictable nature of the COVID landscape. Beyond.Pool™ is also proving to be a particularly appealing solution for both start-up E-Jet operators as well as existing operators who are introducing the E-Jet aircraft into their fleet as evidenced by AerFin’s recent Beyond.Pool™ agreement with Danish operator Great Dane Airlines.
What is next in the pipeline at AerFin?
Bennett: AerFin announcing CataCap as the business’ new majority shareholder last year was a real milestone for the business, not least as we welcome a majority shareholder with a long-term strategic vision that is fully aligned with the AerFin management team. This is paramount for not only helping the business to continue growing its market share on existing aircraft and engine platforms but also helping the business expand its services across different market segments, platforms and in different geographical regions. This last point of course, is evidenced by the recent expansion of our North American presence. Addressing the “Elephant in the room”, the immediate focus for the business lies with how to navigate the COVID storm and the new environment that it is being caused by COVID. We are already noticing new trends of behaviour throughout different segments of the industry as key stakeholders seek technical and commercial expertise to help drive efficiencies in their businesses. This applies to our entire customer base; airlines, MROs, lessors and investors. Expanding our MRO services is and will continue to be a particular long-term focus for the business. Pre-COVID, the MRO segment was experiencing particular capacity challenges. Although we anticipate that COVID will offer some respite to these challenges, demand for specialised engine MRO solutions as well as additional technical consultancy services will be of fundamental importance as airlines seek innovative, bespoke solutions that will help avoid significant investment and mitigate cost exposures.