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United Hires Beijing Firm for Heavy Jet Maintenance

From Bloomberg News

United Airlines said Tuesday that it had hired a Chinese company for major maintenance of its Boeing Co. 777 aircraft, as airlines increase use of contractors to reduce costs.

The estimated value of the five-year contract is more than $30 million, said He Li, chief executive of Aircraft Maintenance & Engineering Corp. of Beijing. The company, known as Ameco, is a joint venture of Deutsche Lufthansa of Germany and Air China Ltd. United has 52 Boeing 777s among its 455 aircraft.

Work under the Ameco contract is expected to start in October, United said. The contract calls for more than 50 heavy maintenance inspections in the first three years and as many as 80 over the life of the agreement.

United has 28 weekly nonstop flights between the United States and China, including daily service to Beijing and Shanghai from Chicago and San Francisco. United and other U.S.-based airlines are adding flights to China under a 25-year-old aviation agreement that the two nations updated in July 2004.

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UAL Corp.'s United is cutting costs as it prepares to exit Chapter 11 bankruptcy proceedings by early next year.

U.S. airlines contract out 53% of maintenance, up from 37% in 1996, according to a Department of Transportation report last month. Northwest Airlines Corp. mechanics went on strike Aug. 20 in part to resist job-cut demands as that carrier contracts out more maintenance.

“The competitive cost structure, high-quality service and guaranteed turnaround times provided by Ameco Beijing will help us reach our cost targets,” Will Crocker, United’s director of technical strategic sourcing for airframe and aircraft components, said in a statement.

The heavy maintenance on the 777s is now done by Timco Aviation Services Inc. of Greensboro, N.C., United spokesman Jeff Green said.

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United, based in Elk Grove Village, Ill., did not say how much it expects the contract to save. The airline hires contractors for all heavy maintenance, which is when the entire aircraft undergoes inspections and repairs. United handles avionics, landing gear, engine and component repair at its own maintenance center in San Francisco, Green said.

United and its mechanics union reached an agreement in May that lets the airline contract with international companies for routine overhaul maintenance on its Boeing 747 and 777 planes. The agreement helps United save $96 million a year.

About 13% of 5,014 outside repair facilities certified for airline use by the Federal Aviation Administration are outside the United States, a spokeswoman said. Twenty are in China.

The FAA must move faster to improve oversight of outside maintenance companies as contracting increases, Transportation Department Inspector General Kenneth Mead said in a report last month.


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