Real Canada Action Plan

[jca]

ACTS readies its expansion plan
Aircraft repair company to add thousands of workers to its El Salvador facilities
BRENT JANG

Canada's largest aircraft repair company, a specialist in fixing Air Canada jets, plans to quadruple the size of its El Salvador operations as it pursues heavy maintenance contracts from foreign carriers.

ACTS Aero Technical Support & Services Inc., controlled since last month by two U.S. private equity firms, is embarking on a major expansion at its 1,000-worker Aeroman subsidiary's facility in El Salvador's capital of San Salvador.

Montreal-based ACTS, formerly named Air Canada Technical Services, outlined its strategy in an 83-page report that it prepared with financial adviser JPMorgan Chase & Co. and Air Canada's parent, ACE Aviation Holdings Inc.

“This expansion plan contemplates an increase of Aeroman's capacity from four to up to 16 lines over the next six years,” the report states.

Two new lines, or hangar bays, are slated to be built in 2008, followed by two more lines annually until 2013. The report doesn't state how many new jobs would be created at Aeroman, but sources say that over the next six years, the work force in El Salvador could grow to nearly 4,000, an increase of 3,000 jobs.

ACTS has 3,600 employees in Canada – mostly in Montreal, Winnipeg, Vancouver and Toronto. “ACTS plans to restructure its existing Canadian heavy maintenance operations to improve productivity and efficiency and reduce their cost structure,” the report states.

Sources say the ACTS paint shop in Toronto will close at the end of December, affecting 34 people, but other contracts will remain at the site. While union leaders have warned that there could be an exodus of jobs to El Salvador, ACTS counters that restructuring doesn't translate into widespread downsizing in Canada.

The goal isn't to transfer Air Canada work done in Canada south to Aeroman, but to broaden the San Salvador plant's non-Air Canada customer list, ACTS chief executive officer Chahram Bolouri said in an interview.

“My biggest issue in El Salvador is how to build capacity to keep up with customer demand,” he said.

The maintenance, repair and overhaul company still envisages a stable work force in Canada. ACTS is striving to win new third-party contracts for engine overhaul and electronic component work to keep its Canadian operations healthy. The goal is to focus on higher-margin specialty projects in Canada that require technically skilled staff.

Canadian employees earn between $1,700 and $5,500 a month, depending on their skills and experience. That compares with $350 to $1,200 a month at Aeroman.

Regularly scheduled heavy maintenance excludes engine and major electronic work. The top-to-bottom inspection of the airframe's exterior and interior occurs every one-to-seven years over a plane's lifetime, taking one-to-six weeks to complete, depending on the scope of the work required, said the confidential report. A single line is staffed by hundreds of workers who attend to one plane at a time.

Montreal-based ACE, which owns 75 per cent of Air Canada, sent the report to more than 20 prospective bidders for ACTS. Last month, ACE sold a 70-per-cent stake in ACTS to New York-based Kohlberg Kravis Roberts & Co. and Greenwich, Conn.-based Sageview Capital LLC, founded by two former KKR partners.

The Aeroman plant in San Salvador has contracts with foreign carriers such as Mexico's Volaris, US Airways Group Inc. of Tempe, Ariz., JetBlue Airways Corp. of Forest Hills, N.Y., and El Salvador-based Grupo TACA Holdings Ltd., a major operator of Central American airlines.

ACTS bought an 80-per-cent stake in Aeroman last February from Grupo TACA.

The report said the shift toward lower-wage operations is a global trend in plane repairs as “airline customers seek to lower their heavy maintenance expense.”

A major challenge will be hiring and training enough aircraft mechanics in Central America to meet demand for plane repairs, so it may take longer than six years to reach the targeted work force of 6,000 at Aeroman.

ACTS, formed in 1937 to service Air Canada aircraft, has done third-party contract work since 1968 but wants to be more aggressive in winning outside jobs for the El Salvador plants.

ACTS at a glance

Founded: In 1937, as maintenance unit of Air Canada.

Sold: In October, 2007, ACE Aviation Holdings Inc. sold 70-per-cent stake to two U.S. private equity firms, Kohlberg Kravis Roberts & Co. and Sageview Capital LLC; co-owners are ACE (23 per cent), Grupo TACA Holdings Ltd. (5 per cent) and ACTS management (2 per cent).

Total staff: 4,600

Head office: Montreal

Plant locations, with employee count: San Salvador (3,000), Montreal (2,421), Winnipeg (630), Vancouver (344), Ontario (174) and other (32).

Heavy maintenance: San Salvador, Montreal, Winnipeg, Vancouver, Toronto.

Engine and/or component work: Montreal, Vancouver, Toronto.

Contracts: Canadian plants specialize in Air Canada work; San Salvador focuses on work for foreign carriers.

http://globeinvestor.com/servlet/story/ ... 126.wracts 26/GIStory/





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[conehead]

What was your point in posting this story, which was written several years ago?

[c170b53]

The aircraft are now painted mostly in California and other places. Aircraft are OH'd everywhere where it's cheap.
The airline business: a bunch of starving vultures, whilst surveying from a tree branch the economic desert below, they patiently wait for one of their pals to fall.