ATLANTA, April 18, 2007 – Delta Air Lines’ TechOps division has signed an agreement with one and reached tentative agreements with three other strategic partners for the support and exchange of engine materials and services, valued at a total of more than $1.8 billion.
Pratt & Whitney and Delta TechOps have entered into an agreement under which Pratt & Whitney will provide engine materials and services to Delta and its MRO customers. CFM International, Chromalloy Gas Turbine Corporate and Evergreen Aviation Technologies Corporation (EGAT) have each entered into memorandum of understandings (MOU) with Delta for the provision of similar services to Delta and its MRO customers.
“These partnerships — each mutually beneficial to Delta TechOps and its partners — demonstrate that Delta TechOps’ sourcing strategy is both highly evolved and highly effective,” said Tony Charaf, senior vice president of Delta TechOps. “We are committed to remaining a nimble and productive organization and by thinking outside the box, we not only bring financial benefit to Delta, we also contribute to TechOps’ success as an MRO business.”
The agreement Delta TechOps reached with CFM, a 50-50 joint venture between GE and Snecma of France, is a proposed five-year exclusive deal in which CFM will provide materials to TechOps for the CFM56-3 engine. This engine type is a core competency product at Delta, whereTechOps professionals have performed more than 125 overhauls on CFM56-3 engines during the last three years.
“The relationship between Delta Air Lines and CFM goes back 25 years when this airline actually launched the CFM56 product line,” said Eric Bachelet, president and CEO of CFM International. “We are obviously very excited about this CFM56-3 materials agreement and the opportunity to take this great relationship to a whole new level.”
Pratt & Whitney signed a 10-year exclusive deal with Delta TechOps in which they will provide TechOps with materials for the PW2000 engine type. Delta was the launch commercial customer for the PW2000 engine and over the years TechOps has developed significant repair capabilities on this engine.
“Delta Air Lines operates the largest PW2000-powered Boeing 757 fleet in the world,” said Jim Keenan, senior vice president and general manager, Pratt & Whitney Global Service Partners. “We are proud to be Delta’s strategic partner and exclusive source of PW2000 material.”
Chromalloy and Delta TechOps have reached a proposed five-year deal in which TechOps will purchase materials from Chromalloy for the CF6-80A2 and CF6-80C2 engine types.
"Chromalloy is delighted to be a part of Delta's plan for the future by providing high quality CF6-80A and CF6-80C2 engine components for the airline's maintenance and overhaul operations," stated Chris Richardson, vice chairman and chief executive officer for Chromalloy. "Delta Tech Ops is highly regarded in the MRO industry for providing not only maintenance services for Delta's own engines, but for third parties."
Finally, EGAT and Delta TechOps have agreed to a proposed 10-year deal for EGAT to provide engine work on the CF6-80C2B8F engine-type. Because there are fewer than 100 B8F engines operating throughout the world and Delta TechOps is partnering with EGAT in order to make room in its engine shop for more long-term and strategic engine insourcing work.
As part of the agreements, each of these strategic partners have also committed to supporting Delta TechOps in continuing the successful growth of its MRO business through engine and component services. This commitment is expected to bring in nearly $550 million in insourcing revenue over the next 10 years.
“These beneficial partnerships signal a thoughtful and comprehensive approach to sourcing,” continued Charaf. “Delta TechOps is a leader in the MRO industry and partnerships like these solidify our place as thought leaders and illustrate the flexibility and resourcefulness in the way we do business.
“The people of Delta TechOps have worked hard to turn TechOps from a cost center into a business,” continued Charaf. “They are directly responsible for creating the largest airline MRO in North America and for continuing to deliver a premium product to our customers.”
Delta TechOps is the largest airline MRO in North America, earning more than $312 million in revenue in 2006. In addition to providing maintenance and engineering support for Delta's fleet of 440 aircraft, Delta TechOps serves more than 100 aviation and airline customers from around the world, specializing in high-skill work like engines, components, hangar and line maintenance. Delta TechOps employs more than 6,500 maintenance professionals and is one of the most experienced MRO providers in the world with more than seven decades of aviation expertise.