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What is Lockheed Martin really up to?

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They're picking over the bones of what's left of Aveos Fleet Performance in Montreal, but still the two hangars sit empty in Winnipeg.

A Canadian subsidiary of U.S. defence giant Lockheed Martin Corp. announced this week it has bought the Aveos engine maintenance, repair and overhaul (MRO) equipment in Montreal and will set up a commercial engine MRO shop there. It expects to hire up to 100 former Aveos workers.

That's the same work StandardAero does in Winnipeg.

StandardAero officials did not have anything to say about the deal this week, even though it's a partner with Lockheed at Kelly Aviation Center based in San Antonio, Tex.

In fact, StandardAero helped Lockheed set up that shop back in the late 1990s and there are a number of ex-Winnipeggers still there.

Industry officials are scratching their heads as to what Lockheed Martin is really up to. Its Kelly Aviation Center in San Antonio is solely a military shop and it does not yet have a book of business in the commercial MRO sector.

"We're very excited about the venture, we're looking forward to working with the Canadian expertise and bringing our experience to bear," Kelly Aviation vice-president Amy Gowder said in an interview with The Canadian Press.

The sale of the business still requires approval from the Quebec Superior Court, but the monitor for Aveos is recommending approval.

The good news for workers in Montreal is little consolation for the 400 terminated workers in Winnipeg.

Tony Didoshak, regional representative of the International Association of Machinists and Aerospace Workers (IAMAW) in Winnipeg, said there are no prospects on the horizon for the reopening of the Winnipeg facility.

"We have had regular meetings with Air Canada (the owner of the hangar)," he said. "They advised us they have no plans as of today."

An Air Canada official confirmed that on Wednesday. But the airline has a lease on the buildings from the Winnipeg Airports Authority that runs until 2015.

Didoshak said he and his IAMAW members were made even more upset recently with news of the opening of an airframe maintenance operation in Duluth, Minn., by a U.S. company called AAR Corp.

And to add insult to injury, the first customer at the Duluth shop will be none other than Air Canada.

The Duluth facility will work on the same Air Canada Airbus planes Winnipeg Aveos workers had previously done the maintenance work on.

AAR Corp., based near Chicago, is a major player in the field with airframe MRO shops throughout the U.S. Its aircraft services division was recently awarded the Best Airframe MRO Provider Award in the Americas by Aircraft Technology Engineering & Maintenance.

The 188,000-square-foot hangar in Duluth is a former NorthWest Airlines facility that itself has been empty since 2005.

Air Canada has a letter of intent with AAR -- the first plane came off the line last month -- on a five-year agreement to have the airframe MRO work done on its 89-plane Airbus fleet.

Eventually, AAR expects to have about 225 workers in Duluth, just 600 kilometres south of Winnipeg.

Around the same time Aveos had the plug pulled last spring, another large airframe MRO hangar was being built in Windsor, Ont., by Premier Aviation, a privately-owned airframe maintenance provider based in Trois Rivieres, Que. Its new 143,000-square-foot hangar was being finished just as Aveos was going dark.

Premier expects to create approximately 200 jobs in the first two years, growing to 300 over the next seven years.

Joy Finnegan, the editor-in-chief of Aviation Maintenance, an industry publication based in the U.S., said it's not uncommon for empty hangars to be repurposed like AAR has done in Duluth. She said aviation MRO is growing at about four per cent per year.

But it's clearly very competitive.

Didoshak said Aveos officials told him they were paying more than $300,000 per month to Air Canada to lease the two buildings in Winnipeg. Another industry source said the buildings were notoriously expensive to heat and operate.

Meanwhile, the Duluth News-Tribune newspaper has reported AAR will be paying only $34,000 per month to lease the facility after negotiating a big rent break from the local economic development authority.

With facility rental at about one-tenth the cost, it's not hard to imagine AAR would be able to charge Air Canada less than Aveos was charging.

All that action in the business shows it's clearly not enough to have a shop and trained workers to ensure a sustainable business.

 

martin.cash@freepress.mb.ca

Republished from the Winnipeg Free Press print edition January 10, 2013 B5

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About Martin Cash

Martin Cash joined the Free Press in 1987 as the paper’s business columnist.

He has spent two decades chronicling the city’s business affairs.

Martin won a citation of merit from the National Newspaper Awards in 2001 for his coverage of the strike and subsequent multi-million-dollar union settlement at the Versatile tractor plant. He has also received honours and awards for his work on agriculture and technology development in Manitoba.

Martin has written a coffee-table book about the commercial and industrial make-up of the city, called Winnipeg: A Prairie Portrait.

Martin Cash on Twitter: @martycash

martin.cash@freepress.mb.ca

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