Outgoing CEO changes hat at Lufthansa Technik Malta

Louis Giordimaina wears a different hat at Lufthansa Technik from today after 10 years as chief executive of the €70 million aircraft maintenance, repair and overhaul facility he was instrumental in bringing to Malta in 2002.

Mr Giordimaina, the only non-German chief executive in the Lufthansa Technik group, accepted the company’s invitation to stay on as director of the Malta facility to lend his support to relations with the government (Lufthansa Technik Malta is a joint venture with Air Malta plc) and to business development.

His successor is Stephan Drewes.

“Lufthansa Technik Malta has become the largest and one of the most important facilities the group has in Europe outside Germany,” Mr Giordimaina told The Times Business.

“Additionally, it is one of the most important and prime MRO players in the industry, not only in Europe but throughout the world. Malta has become a centre of excellence for aircraft base maintenance on both wide and narrow body aircraft. We have achieved this over the last nine and a half years from our humble beginnings when we only carried out ‘C’ Checks on one narrow body aircraft.”

Following major investment in 2008, Lufthansa Technik Malta inaugurated a new facility which would allow the company to service four narrow body aircraft and two wide body aircraft simultaneously in six dedicated bays.

With a total staff complement of 620 – up from 450 in 2009 – the increased capacity will this year see Lufthansa Technik clocking more than 650,000 productive man hours. It is a significant increase from an average of one check a week in 2003. Thirty per cent of the productive man hours are now spent on aircraft belonging to third party customers.

Mr Giordimaina said the targetted business had been won. Lufthansa Technik Malta now boasted a client portfolio which included premium airlines like Qatar Airways and Etihad Airways, for which the MRO facility had just completed an “interesting” 18-month programme on A330 and A340 aircraft to reconfigure First and Business Class interiors apart from other checks.

Mr Giordimaina duly produced a framed certificate sent by Etihad thanking Lufthansa Technik Malta for having “exceeded customer expectations in terms of quality and on time delivery”. He said he had been too busy to have it hung on his office wall, adding new customers had been secured for the rest of the year.

The first of these comes to Malta in the third week of October: TAM, Brazil’s second largest airline, will bring in wide body aircraft for checks. SM Brussels also have a maintenance check programme on wide body aircraft booked for before the end of the year.

“The wide body aircraft segment is totally different as distance becomes almost irrelevant,” Mr Giordimaina added. “Winning business from South America is the result of a combination of factors. Lufthansa Technik competed for the TAM tender promoting Malta as one of the facilities for the job. We competed with other major international MRO players across Europe and the world. The tender was based on pricing, value added factors, favourable facility inspection results, and our track record.”

The outgoing chief executive emphasised it was crucial Lufthansa Technik Malta retained cost-competitiveness. The Malta facility was not the least expensive when compared to the group’s other European operations.

Malta was, however, among the most attractive to clients when its cost structures were married with efficiency.

“Competition in MROs has become intense,” Mr Giordimaina continued. “Up to some time ago, contracts for base maintenance were signed for periods of up to five years. Nowadays, clients are ‘shopping around’ and facilities are fortunate to win contracts of up to 12 months. Some clients are even contracting one check at a time and facilities are not assured of repeat business even if all criteria have been met or exceeded.

“The recession has brought airlines to this situation and all our competitors are facing customer sensitivity to pricing. Our industry is very labour intensive; this is why it is important to keep labour costs at a certain level.”

Mr Giordimaina explained that the aircraft maintenance industry was yet again emerging from another downturn since the September 11 crisis as airlines ground part of their fleets and demand for MRO services slowed.

Lufthansa Technik Malta is credited with spawning a new educational niche for aircraft maintenance training. As the operation grew steadily, it was instrumental in nurturing a new talent pool.

Malta’s first group of non-aircraft technicians were trained at Lufthansa Technik’s Frankfurt facility. Mr Giordimaina recalled how he resisted the pressure to establish a training school in Malta, adamant that it was important for the operation to focus on its core business.

Lufthansa Technik’s experienced technicians were roped in to assist with three-year courses at the Malta College for Arts, Science and Technology. Mr Giordimaina said three groups of “excellent” candidates were produced from those courses. Later on, Lufthansa Technical Training was brought in to help design modules for a 20-month course and LTT instructors coached MCAST trainers while the college invested in new workshops which were audited by German authorities.

More than 50 per cent of the new course consisted of practical training, which continued, along with supervision, as soon as the newly qualified candidates were employed by Lufthansa Technik; over 65 per cent of Lufthansa Technik Malta’s 420 aircraft maintenance personnel are former MCAST students. The rest also comprise a number of former Drydocks workers.

In 2009, Mr Giordimaina had told The Times Business Lufthansa Technik Malta would increase its workforce to 700 from 450. The official staff complement currently stood at 620 which, he said, swelled to well over 700 when sub-contractors are engaged to deal with peaks.

“For the 650,000 man hours a year, we are efficient with what we have at this moment,” Mr Giordimaina pointed out. “We have to be very careful when increasing headcount as that is a cost. Our facility is capable of more productive man hours. In the future, should the company decide to aim for more productive man hours then the head count will increase.”

Mr Giordimaina said Lufthansa Technik Malta will now move into a consolidation period after four years of major rapid expansion.

The current process, which Mr Giordimaina said fell in line with that of the rest of the Lufthansa Technik group, was intended to strengthen Malta’s positioning as one of the centres of excellence of MROs with its footprint in the central Mediterranean.

Meanwhile, Lufthansa Technik will continue to broaden its client base as it bids for business from low-cost and legacy airlines, and increasingly tap the aircraft lessor market.