Air France 2008 Annual Report Download - page 46

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46
Maintenance activity
opened a new in-line maintenance center at London City
Airport, enabling it to provide this service for the CityJet
fleet and to new third-party customers.
Major changes in the heavy maintenance business
As a highly labor-intensive business, the heavy airframe
maintenance activity is evolving with the arrival of new
technologies and the improved reliability of materials and
to contend with competition from low cost countries. The
Group is adapting its industrial facilities and calls on
airframe maintenance capacity in low-cost countries in
order to be able to market a competitive service in this
segment, while retaining strategic expertise in the heavy
maintenance of the fleets it operates as well as its cabin
modification capacity close to operations.
A multi-product offer tailored to customer
expectations
The engineering of the Group’s fleet is handled by AFI and
KLM E&M, ensuring that this activity’s legacy of skills and
expertise is perpetuated and enabling it to offer
customized monitoring of customer maintenance
programs. From line maintenance to component support,
engine overhaul and cabin modification, the AFI and KLM
E&M multi-product offer covers the entire maintenance
chain.
A significant dollar effect
In an increasingly competitive market, the maintenance
activities located in Europe are impacted by the
devaluation in the dollar relative to the euro. In effect,
contracts are principally negotiated in dollars, whereas the
costs of European maintenance activities are mostly in
euros.
Two specialized centers for the Group
The Group’s MRO (Maintenance, Repair & Overhaul)
activities are mostly regrouped within two profit centers:
Air France Industries (AFI) and KLM Engineering &
Maintenance (KLM E&M).
AFI and KLM E&M maintain the fleets of their respective
brands as well as those of over 150 customers, handing
more than 900 aircraft. The Group’s total MRO revenues
amounted to 2.9 billion. In order to ensure maintenance
located as close as possible to the operational fleet, AFI
has runway-located facilities, known as HMCs or hub
maintenance centers, so that inspections can take place
as soon as aircraft arrive at the terminal. Procedures have
been optimized, enabling information to be received prior
to the aircraft’s arrival and maintenance and materials
planned. These new facilities improve line maintenance
and contribute to the respect of the Group’s maintenance
program. Similarly, subsidiary KLM UK Engineering has