Airbus Ramps Up Services Business With Malaysian Deal

By Robert Wall Features Dow Jones Newswires

Airbus SE on Thursday said it had taken full control of an Asian plane-repair company, as it and rival Boeing Co. both embark on a push to win a greater share of the lucrative market for servicing airliners.

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Airbus said had acquired all of Malaysia's Sepang Aircraft Engineering company after it purchased a 40% stake in 2011. The value of the deal wasn't disclosed.

Plane makers Boeing, the world's largest by deliveries, and No. 2 Airbus for years have focused on making planes, leaving it to others to concentrate on making money over the more than 20 years those airliners generally are in service. But with airlines demanding steeper discounts when they buy the aircraft and investors seeking greater profits, the plane makers are looking to win a larger share of the so-called aftermarket business.

Boeing on July 1 set up a new unit to oversee combined commercial and military services. The company wants to grow its services business to $50 billion in five years.

Boeing estimates the market for global commercial aviation services at $8.5 trillion over the next 20 years, including fixing planes and activities such as training pilots. David Longridge, Boeing's head of sales for commercial aviation services, this month said the company would also be willing to provide services to airlines on planes made by Airbus or other manufacturers.

Laurent Martinez, head of services at Airbus, said that with the size of the global fleet of aircraft in service growing rapidly, the European plane maker is boosting its efforts to gain scale. Unlike Boeing, the company hasn't given a public figure of how much revenue it wants to generate from services. Airbus also is focusing mainly on its own planes.

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Airbus's purchase of the repair facility in Kuala Lumpur is aimed at strengthening the European company's plane-repair capability in Asia and helping the company innovate how it services planes, Mr. Martinez said. The facility employs around 500 people and has contracts with budget carrier AirAsia, India's Indigo, and Scoot Tigerair Pte Ltd., a discount unit of Singapore Airlines.

Mr. Martinez has said Airbus was also working with a small network including other plane repair shops to provide its services. Boeing said it wouldn't form networks but would select repair facilities depending on what would best fit the airline customer buying its services.

The Airbus deal comes almost two years after the Toulouse, France-based company acquired Navtech, a flight operations technology provider, in another effort to bolster its services activities.

Airbus in June also unveiled a far-reaching effort to collect data from its planes operated by airline customers. It would work with data-mining company Palantir Technologies Inc. to crunch the numbers and help airlines better use their planes. Mr. Martinez said the outcome of much of the data analysis would be provided for free to get airlines to buy its planes and services. Some data products could also be sold.

Write to Robert Wall at robert.wall@wsj.com

(END) Dow Jones Newswires

October 12, 2017 03:14 ET (07:14 GMT)