The largest Russian airlines, Aeroflot and S7 Airlines, are activating the development of MRO business, Kommersant reports. S7 Airlines is completing the unification of two specialized enterprises in order to promote them under an independent brand. Aeroflot may create a large joint venture with Lufthansa Technik. At present only a third of Russian airlines’ fleet is being repaired in Russia, but in future this market’s capacity is assessed at $500 million a year.

S7 Group (includes S7 Airlines) has taken a decision to unify the controlled MRO enterprises and create a large maintenance holding. Several top-managers from S7 and its subsidiaries have reported this information. В новую структуру войдут "S7 Engineering" (based at Domodedovo and Minvodi), "Sibir Technic " (Novosibirsk) and "Domodedovo Technic" will form a part of the new structure. 100% of the new structure have been acquired from Domodedovo airport in 2010. Vladimir Perekrestov, former top-manager of Tolmachevo airport and S7 Airlines, will be the head of the structure.

Aeroflot, which is repairing mostly its own aircraft at Sheremetyevo, is considering the creation of joint repair company with Lufthansa Technik, the source, close to the carrier, reports. Sources at the market are saying that private shareholders of Vnukovo airport are looking for a buyer for Vnukovo aircraft repair enterprise N 400. However, a source, close to the owners of the enterprise, reports that no such actions are planned. Moreover, it is planned to develop the enterprise, since the market of MRO is starting to grow, says the source.

The potential capacity of this market is assessed by the major players at 15 billion rubles per year: every aircraft requires a monthly maintenance, which costs 2,2-2,5 million rubles, and a comprehensive technical maintenance must be performed once a year for every aircraft too, which costs more than 20 million rubles. But to these figures are correct only assuming that all the 900 operated large aircraft will be serviced in Russia (from 50-seat Bombardier CRJ to 400-500-seat Boeing-747), instead of only third of them, as it happens today. The source, close to Vnukovo aircraft repair enterprise N 400, has assessed the profitability of this business at 10-15%, but the enterprise’s loss in the first quarter of 2011 was 64 million rubles, while the revenues were 137 million rubles.

The main reason for the most carrier’s, including the largest ones (for example, Aeroflot is also servicing its aircraft in France, Germany and USA) servicing their aircraft abroad is difficulties with custom proceedings of the spares and lack of practice for Russian enterprises in performing complicated repair. However, the custom’s work is improving, Russian enterprises have trained to perform difficult repairs and they are ready to perform it for less money than European and even Chinese facilities. AEX.ru