Boeing Explores Plane Maintenance Business Subsidiary May Offer Airline Maintenance Through Joint Venture Or Acquisition

We build the planes. You keep them flying.

That’s the way aircraft manufacturers traditionally have operated.

Now, Boeing Co. executives say a newly formed subsidiary, Boeing Enterprises, may offer to relieve airlines of major overhaul and maintenance, possibly by joint venture or purchase of existing operations.

The option would cover work that is more extensive and costly than the routine pre-flight checks or simple repairs that airline crews perform between flights or on an overnight basis, said Barbara Murphy, a spokeswoman for Boeing Commercial Airplane Group.

On the Boeing 757, for example, a C-Check that includes a structural inspection for corrosion, cracks and other deterioration is supposed to be done every 6,000 flight hours, 18 months or 3,000 flights, whichever comes first. An initial C-Check can last about a week. Every fourth C-Check, which includes the application of corrosion inhibitors, can take a month.

Potential savings would come from easier access to parts and Boeing’s familiarity with its own planes and the maintenance they require.

The service would be offered to airlines of all sizes and could be located at more than one site, within the United States or elsewhere, “if indeed this is an area that we pursue,” Murphy said.

“It’s still in the developmental stage,” she said. “Maintenance is just one idea among many that are being pursued under the umbrella of Boeing Enterprises.”

Others include Boeing Business Jets, a joint venture with engine maker General Electric to market the 737 airframe for corporate use, and FlightSafety Boeing Training International, a joint pilot-training venture with financier Warren Buffett’s FlightSafety International Inc.

Unlike those diversification projects, airplane overhaul has yet to get off the ground.

Potential downdrafts range from the risk of upsetting customers such as American, United, Lufthansa and Malaysian Airlines, which perform some third-party major maintenance for other companies, to union contracts, Murphy said.

“We’ll have to do this with care so we don’t find ourselves competing with our customers,” said Lawrence Clarkson, president of Boeing Enterprises.

John Leahy, sales chief for Airbus Industrie, told the Wall Street Journal that Boeing’s principal rival had no comparable plans to offer major overhaul services because “we try whenever possible not to compete with customers.”

Clarkson said Boeing had talked “with several airlines in this area that could result in either an acquisition of their maintenance business or perhaps a joint venture.” He would not elaborate.

The Journal reported that the potential move could be modeled after GE’s engine repair and overhaul business, which is expected to generate nearly $3 billion a year in revenue by 2000.

Murphy said she did not know how union issues might affect Boeing’s maintenance plan.

The Seattle Professional Engineering Employees Association asked the National Labor Relations Board last month to seek a court injunction against the FlightSafety venture, accusing Boeing of illegal direct bargaining with employees in a move that would slash retirement and medical benefits and eliminate union representation for workers transferred to the new company.