Recovery – Refinancing – Restructuring

MRO Restructuring & Recovery
When an MRO (EASA 145 or FAA) is in financial difficulty or is not reaching its potential then an independent analysis is the way forward before committing significant resources to restructure the MRO.
IAG has teamed up with a Global Accountancy Practice in London to provide quick and referenced reviews using IAG’s experienced team who have an intimate knowledge of MRO and support operations and restructuring, combined with a global accountants input.
This MRO restructure/recovery review is similar to a feasibility study, with the addition of a review of the compliance management system to provide the board/investors with a range of qualified, and referenced options upon which to make decisions on the operational aspects of the MRO along with the financial (possible debt and refinancing) status. Compliance management is often only paid lip-service during corporate re-structuring, it is often seen as a hindrance to the business, where in fact it is keeping the business alive.

Whenever an organisation is considering restructuring or administration, we would strongly recommend that they establish a comprehensive communications plan, addressing both internal and external stakeholders. The message is the same for both groups, the means of delivery and emphasis will vary. Restructuring and uncertainty require the management team to be visible and open.
We propose a three stage cost effective process:

Step 1 – A short professional review to provide options for the board to consider – 4 to 6 weeks duration.
Step 2 – A full top to bottom MRO restructure review (similar to a fresh feasibility study) – 10 to 12 weeks duration.
Step 3 – After board/investors approval, full implementation follows which is project managed by IAG

Decisions should be neither too low nor too high, both ambitious and demonstrably achievable – our MRO recovery programme will include the following:

  • Start with a top-down/bottom -up complete assessment to set a challenge for what can be achieved, without focusing too early on exactly how it will be achieved, but with pragmatic recovery and restructuring targets.
  • Base the assessment on all areas and drill down within each part of the operation. For example, review all:
    • Airline contract
    • Scope of Work – does the aircraft/ component mix on the approval work, simplify and reduce the types or part numbers, focus on the value, not volume
    • Support Contracts – how is your work contracted, forward commitments or individual P.O.’s only
    • Staff contracts – wrongly paying approval pay for those aircraft types not on the Part 145 Approval
  • Boldly evaluate the business model:
    • MRO’s could choose to consolidate and cherry pick a limited portfolio of purely high value work and contracts. Decisions here will, in turn, guide the more detailed assessment.
    • Sell the operation to a larger competitor or investment group.
    • Procure other distressed MRO operators
  • Assume the mind-set of an activist investor or private-equity acquirer: be ambitious, disruptive and unconcerned about maintaining the status quo – our team will ruthlessly and without emotion or other outside influences review and report.

The main departments covered in any review with respect an MRO restructure or recovery will be: Operations, Commercial, Maintenance, Repair & Overhaul (MRO), Human Resources, Finance, Support Services and Transformation. Regulatory compliance, which is not discretionary, does in many cases distort the “traditional” administrators’ image of a business, what might be seen as an indirect employee, may be a post required by Regulation.
We can provide immediate Crisis Management,  Cash Flow Improvement, a Restructuring Blueprint also Interim MRO Management (post holders) – the most important element is to act fast and not try and trade out of a situation – unfortunately sometimes harsh and painful decisions need to be taken.

IAG MRO Recovery Team
The IAG MRO recovery team have all either operated MROs or have been senior management for service providers – so “poachers turned gamekeepers”! In addition to their diverse senior management roles, the Team have been involved with special projects and the establishment of EASA approved operations across the globe.

Our MRO Specialist team is actively involved with a distressed aircraft component overhaul company and is overseeing the restructuring of the business to meet the new airline environment.

Our guidance is independent.

MRO Feasibility Studies (to EASA 145) & MRO Restructure programmes
MRO Planning & Architectural Design
MRO Build & Project Management
MRO Staff Recruitment (Post Holders etc.)
MRO Management & Operation (also restructuring)
EASA Part 145 Consultancy
MRO systems, software and tooling suppliers
MRO software solutions
Malcolm Cox

Malcolm heads up our MRO and Engineering division. Malcolm has over 30 years experience built upon the solid foundations of a RAF Halton Apprenticeship and 22 years service in the RAF at home and abroad finishing his military career as an Engineering Officer. Since leaving the Service he has had a number of high profile appointments supporting some Europe’s leading low-cost carriers as a service provider with responsibility for continuing airworthiness management. As a practicing aircraft maintenance manager, he brings a strong commercial focus to the application of regulatory compliance – some of Malcolm’s experience includes:

International Aviation Group Albanian Airlines

Interim Technical Director – manage the transition from local Albanian approval to EASA Part 145 and Part M Continued Airworthiness Management approval, 6 months project, subject to two EASA Standardisation Team visits, the “roadmap” to approval was accepted and monitored. Project ended due to financial issues within the airline.

International Aviation Group Britten Norman

Full responsibility for all aspects of the service provided to a worldwide community of 850 Islander, Defender and Trislander operators and active in the development of a military approval system based on the EASA approval systems. Responsibility for 30+ staff, annual budget of €10m+.

International Aviation Group Eurocopter

Interim Post Holder for Planning (McAlpine Helicopters) the role of the project was to restore CAA confidence in the Completions centre, provide EC UK with repeatable and accurate planning data to support sales function. Increased management visibility of the true cost of sales.

International Aviation Group Eurocopter

Business Process Re-engineering at EC UK, the role of the project was to remove surplus and redundant processes and procedures from the management system, focus on aircraft availability and customer satisfaction.

MRO Feasibility Study (EASA 145)

It is important from the outset to plan and cost your current but also future requirements and in most cases ensure an MRO centre can become a long-term profitable company – in many cases it is ideal to incorporate an International Aviation Engineers Academy (EASA 147) – teaching new engineers to International standards from leaving school to degree level.
If you are planning a new MRO  then the first step is an MRO Feasibility Study which will plan, design and cost the whole operation.

A comprehensive and detailed study with financial projections to enable you to establish and operate a new Maintenance, Repair and Overhaul Centre (MRO Centre) at an International Airport operated to local and European approvals EASA 145. Any MRO Centre must be approved by the aviation authority responsible for the registration of an aircraft, supported by the MRO Centre, additionally; the MRO Centre will have to demonstrate to the applicable authorities that they have the necessary manpower, tooling, material and documentation to support a particular aircraft type. The MRO Centre would hold multiple national approvals, for multiple aircraft types – usually in 2 phases as explained below.

  • Phase 1 of the MRO Centre would support the development of the airport, through the provision of approved line maintenance facilities (EASA 145) for all aircraft operating in to the airport. Services would include ad-hoc defect rectification, the replacement of Line Replacement Units, attend the aircraft and where contracted complete “out-of-phase” maintenance.  The establishment of this line maintenance facility, with applicable national approvals would de-risk the operation for International and European airlines.
  • Phase 2 of the MRO Centre would support all flight related activities in the region with extended base maintenance facilities including aircraft paint facilities, specialised rotary wing maintenance hangars, component overhaul facilities for: aircraft cabin component, passenger seats, galley equipment, aircraft batteries, wheels, and brakes.  The facility would supply maintenance, repair and overhaul of civilian aircraft; turbo-prop, narrow body, wide body and of course helicopters. This would also extend to spares supply, disposal, parting out of aging inefficient aircraft as they retire from active service, and field service support.

In order to ensure the MRO Centre is self-sustainable in the long-term, it is our intention to usually propose an embedded training facility within the operation; the training facility would be approved to EASA Part 147 and would take ab-initio students from leaving school at age 18 through to graduate level. The training would initially be underwritten by a UK University, with a phased transition to an appropriately qualified and experienced local university.