THAI, Rolls-Royce ink 10-year deal for maintenance centre
Partners seek B1bn profit in first year
Thai Airways International Plc (THAI) and British aircraft engine maker Rolls-Royce have teamed up on an engine maintenance centre in Bangkok, with an aim to generate 1 billion baht in the first year of operations.
Surachai Piencharoensak, executive vice-president of the technical department at THAI, said the two companies signed an agreement for 10 years after conducting a feasibility study which took over a year to complete.
Under the agreement, THAI will invest 500 million baht in the first phase planned for 2018-2020, mainly in training and facilities at its existing maintenance centre located at Don Mueang airport in Bangkok.
Rolls-Royce will transfer knowledge and provide training for Thai technicians as well as work to attract customers to the new centre.
Additional investment will be finalised before the first phase concludes, while further collaboration could come in the form of a joint venture.
Mr Surachai said the centre will begin by servicing Rolls-Royce Trent 1000 engines by the fourth quarter or early next year.
Some 30 engines are expected to be serviced in the first year, followed by 70-80 engines annually in the following three years.
If all goes according to plan, revenue for the first year is projected at 1 billion baht, climbing to 4-5 billion annually thereafter.
Currently, THAI's maintenance centre contributes 3 billion baht per year, a small fraction of its commercial and logistic business, which generates total revenue of 160 billion.
"Through collaborating with Rolls-Royce, THAI will be able to service customers from outside the country," said Usanee Sangsingkeo, acting president of THAI.
THAI, which has 3,500 technicians, is expected to need another 50-60 for the project.
She said for over 35 years, THAI has continually developed its technical capabilities in different areas, including personnel training to expand their knowledge and skills, while the company has employed high technology to accommodate new types of aircraft engines.
The establishment of the aircraft engine maintenance centre is specifically targeted to expand the company's ability to service Rolls-Royce Trent 700 series and Trent 1000 engine types in response to current demand in the region.
"THAI will be able to optimise the use of the centre and promote joint business opportunities, generating income from customers outside of Thailand and creating returns that benefit the entire company," said Mrs Usanee.
The facility falls under the government's target industries for development, which are expected to form important mechanisms for driving economic growth in the country.
The facility will also support plans to develop an aircraft maintenance centre in the Eastern Economic Corridor, enhancing Thailand's overall capabilities in the industry.
Chris Cholerton, president of civil aerospace for Rolls-Royce, said the facility will not only serve modern Rolls-Royce engines, but also open the door to provide services to other carriers.
Rolls-Royce forecasts global air travel to expand by 7% this year -- 1.5% higher than the 20-year average.
Most of the growth is set to come from Asia-Pacific, with traffic forecast to rise by 9.5%.
"Asia-Pacific already has the highest passenger levels in the world, and that's why we are working together on this opportunity," said Mr Cholerton.