Lufthansa Technik investing $40M to expand PH capacity

Lufthansa Technik Philippines (LTP), one of the country’s biggest aircraft maintenance, repair and overhaul (MRO) companies, is building a $40-million hangar to expand capacity in Manila.

LTP held a groundbreaking event on Wednesday for what was dubbed Hangar 1A, which will create 275 jobs and will open by the fourth quarter of 2020, said Elmar Lutter, president and CEO of LTP.

LTP, which employs 3,300 workers and caters to global airlines such as British Airways, Korean Air and Philippine Airlines, is a venture between Lufthansa Technik and aviation services firm MacroAsia Corp., controlled by PAL owner Lucio Tan.

It plays a crucial role in the aviation sector where it handles everything from base maintenance— more extensive checks that could last weeks to months— to shorter aircraft servicing in between daily operating schedules.

Lutter noted that the new hangar, which will rise on the MacroAsia Special Economic Zone, Villamor Airbase in Pasay City, would increase capacity in the 229,000-square-meter facility by 20 percent.

Once finished, LTP will have 10 bays that can service a range of planes from mid-range Airbus A320s to the A380, the world’s largest commercial aircraft.

“Lufthansa Technik Philippines has always been the country’s forerunner in the MRO industry. As we approach our 20th year, it’s about time we showcase the Philippines as an aviation stronghold in Asia-Pacific,” Lutter said.

Lutter told reporters that the confidence in the sector and the country came despite concerns of a slowdown in global aviation and potential new taxes on aircraft spare parts used in its day-to-day operations.Lutter, who earlier said MRO companies overseas do not pay value-added tax on spare parts, said they have made this position known to the Department of Finance, which is pushing for a new round of reforms under the Corporate Income Tax and Incentive Rationalization Act.

He added that LTP was taking a long-term view despite the International Air Transport Association recently downgrading its outlook for 2019.

Lutter said the industry was still growing and training skilled workers and building new facilities takes time.
“The aviation business is always a cyclical business,” he said.

MacroAsia president and chief operating officer Joseph Chua said LTP was open to making new investments in other locations since Hangar 1A would have exhausted the last available space in the facility, which is adjacent to the Ninoy Aquino International Airport in Manila.

Chua cited locations such as the Clark International Airport in Pampanga province and even San Miguel Corp.’s planned $15-billion international gateway in Bulacan province.

“LTP follows where the airline goes,” he said. –Miguel R. Camus