GE Aviation Services picks Malaysia as hub for MRO business

24 Jun 2008

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Subang, Malaysia: General Electric (GE) Aviation Services-Malaysia has decided on Malaysia as the regional hub for aircraft engine maintenance, repair and overhaul (MRO) activities.

Company managing director Douglas F McLean said the upgrading would mainly cater to AirAsia's newly-acquired CFM56-5B engines, aboard its Airbus A320s, for the next 20 years. It will also service Japanese, Chinese, Indian, New Zealand and Australian airlines.

McLean said Malaysia was the natural choice on account of its lower cost structure, combined with GE Aviation's long presence in the country and business growth over the years.

AirAsia is expected to get its first engine serviced at the GE Engine Services Malaysia (GEESM) shop sometime next year. The airline also has the option of taking up a 19 per cent stake in GEESM, under the MRO agreement.

GE vice-chairman, president and chief executive officer John G Rice announced a $5 million (RM16.5 million) investment for the expansion of the company's engine overhaul and service maintenance set up in Subang.

McLean said, ''The capabilities expansion at GE Engine Services Malaysia sees a further $3 million to be invested in the next three years that will generate $50 million in revenue. These new investments will offset the projected drop in older product lines and will keep GEESM at the leading edge of engine MRO technology.''

GE Aviation Services (GEASM) is the larger partner in a joint venture between GE Engine Services, Inc., owning 70 per cent in the venture, and Malaysian Airline System Bhd (MAS), which holds the remaining 30 per cent.

McLean told the media that over the coming five years, revenues contributed by AirAsia's to GE Aviation would go beyond the contribution by MAS, which is presently its single largest customer, contributing between 30 per cent 40 per cent to its revenue of about RM1 billion. AirAsia's present contributions are at around 15 per cent.

In the past year, the aviation business was GE Malaysia's biggest revenue earner, with GE Aviation clinching deals with MAS and AirAsia worth a total of $2.1 billion in engines, and $2.64 billion in maintenance contracts.

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