5 Solutions and 3 Tips for Your Engine Overhaul
In times where flying hours are up one year, down the next and contractual rates increasingly competitive it’s all the more important to optimize DMC (Direct Maintenance Cost). As you know, the highest maintenance cost on a helicopter is the power unit consisting of the engines and combining gearbox. This is why it’s all the more important to get it right when it comes to global understanding of options and key considerations.
In this article I will share my experience in managing overhauls and how best to minimize cost while getting your engine ready in time. You have several options to consider when making your decision on refurbishment of your engines. Different options bring advantages and potential downside. Here is a comparative table to help assess what is best in your situation:
5 Solutions to get an Engine in Overhauled Condition
As a first step I would recommend making a decision on the above solution depending on your cash flow situation, cost tolerance, planned aircraft possession timeline and other potential considerations.
Now let’s examine overhaul “should cost”. The first consideration is understanding what the market is for the power unit on an outright purchase basis. This will then help determine what is reasonable to pay for repairing or overhauling a unit. From our experience and our own current pricing practices, freshly overhauled PT6T-3B engines with good pedigree and rotating components that will last full TBO (time between overhaul) of 4000 hours with at least 2 cycles per hour will be priced from 345,000$ to 375,000$. Obviously this will depend on supply and demand and customer preferences. From the outright price you then deduct the core engine value. Again depending on life remaining on rotating components, configuration, and time since new the core will be worth between 40,000$ and 75,000$ for a PT6T-3B engine. Therefore basic math applied the max you will want to pay for overhaul is (345,000 min outright price – 75,000 max core value) = 270,000$ and (375,000 max price – 40,000 min core value) = 335,000$. So now we have our target: 270,000$ – 335,000$ including accessories. As a rule of thumb, if you get a cost estimate or expect you engine to be over 300,000$, I would strongly recommend you hit the market to see what options you have depending on your specific requirements and to ask suppliers what value you will get for your core on an exchange basis.
When shopping the market, keep in mind the conditions required will define supply. For example some customers will require dual certification FAA & EASA or certification by other civil authorities. Others will expect low time since new. Also depending on mission profile (high cycle usage vs low cycle usage) different rotating part lives can be required to optimize DMC.
3 Tested and True Tips to Reduce Cost:
1. Plan ahead: More you have time ahead of you more you can…
a) Get firm quotes from suppliers or qualitative conditions (new parts discount, labour cost, customer supplied part embodiment rates)
b) See what exchange options are available
c) Have a partner build up engine based on your specific needs. For example, if your mission profile allows for it installing a lower cycle remaining CT disk may save you 30-50,000$ on your exchange.
2. Evaluate installing FAA & TCCA approved PMA (Parts Manufacturer Approval) or DER (Design Engineering Representative) repaired parts.
3. Make use of serviceable overhauled components to for parts needing replacement
a) Leverage partners such as Optima Aero with large inventories to supply parts discounted from 50% to 70% vs new parts
b) Encourage your overhaul shop to search the market or help them by providing sources yourself for parts
By applying these methods, Optima Aero has been able to supply engine overhauls consistently under 240,000$. I encourage you to reach out to us at Optima Aero for explanations on the above information or to inquire about other engine models. We have solutions designed and tested that will help you optimize DMC, cash flow and asset availability.
Maintain well, fly well, Operate best,
President, Optima Aero inc.
Mel drives a Tesla but the Bell 212 / 412 will still be around for a while
I was in Calgary recently with Lionel Meyer my business development lead at Optima Aero, we were there to visit with operators and maintenance facilities for the week. April is always a busy time in maintenance for North American operators getting ready for the “fire season”. The trip started out by visiting, I must admit one of my favorite industry leaders in maintenance and operations of Bell 412s: Eagle and one of its emblematic personalities JC Blandin. I always love meeting JC, we has a no BS approach and a distilled insight derived from more than 40 years in the business, from the ground up and never more than a step from the shop. In doing a tour of the bustling facility, I am surprised to walk by a Tesla parked inside one of the countless hangars Eagle occupies at the Calgary airport. It was apparently Mel O’Reilly’s (The founder), I was impressed by that forward looking statement. But should I have? Mel O’Reilly, originally from Quebec City, traveled the world and eventually set up shop in Calgary in 1975. Needless to say the company has come a long way and innovation and growth have been its hallmark. With DART, the ERA partnership, bases around the globe, the Bell 212 single STC and countless others measures of the team’s outgoingness, innovation is evident. The company is however still very invested in the 212/412 market with 40+ A/C Leased. Being very invested ourselves in PT6T engines, with what I think to be one of largest inventories around, and a key field of expertise, I couldn’t help but ask JC what his views were on the future for the 212 / 412. As a true wise man he answered with a simple but revealing question: What is the replacement?….Think about it, for the money what workhorse can perform the carrying, payload and missions, land in bush, and have the established affordable parts, trained AME base and maintenance network? Good point. Just goes to show why Eagle and its leadership (Mel, Mike O’Reilly and President Barry Kohler) is always forward looking but firmly grounded in common sense, and a good business model (but that you already knew…). After this first encounter, we visited the key operators with P&WC engines we support (PT6T, PT6C, PW200) and got a good feeling that the local community was overall doing well after last year’s fire season, a few new long term fire contracts won in Ontario and steady as she goes Heli-Skiing. One of the other interesting observations is that there seem to be more foreign ships being imported (Bell 412 / AW139) by local operators. Always good for us to have customers building fleets we can support in country J
Perks of Doing Business in Louisiana
It’s been a tough, cold and long, long, long winter in Montreal this year. Needless to say it was a welcome trip to fly to Louisiana to see my friends at the major helicopter operators in the Gulf of Mexico. In meetings with Bristow, PHI and ERA I was privileged to get an overview of how operations have improved with a stabilizing oil price at the 65$+/barrel level, from 40$/barrel two years ago. Seems like volatility is out of the air somewhat. Moreover, I was told that more efforts are being put into diversifying operations and revenue to soften the blow of future dips. One example of geographic diversification is PHI’s recent acquisition of HNZ from CHL. It is also public knowledge that EMS is another axis of diversification.
My four ideas that could help oil & gas helicopter operators:
1. Sharing risk of operations with maintainers / OEMs:
a. Leasing options on complete aircraft, components or engines with shared risk clauses (adjusted rates and operating hours related to oil prices)
b. Hourly maintenance plans with no minimal flight hours and options to “borrow back” accrued maintenance funds to help with operating cashflow
2. Continued diversification with alternate uses and geography (probably easier said than done…)
3. Upgrade rather than replace fleet policies (requires customer education / incentives)
a. Improved safety and performance through STCs
b. Better amortization of assets
c. Better/larger common used parts market, and MRO network
d. Less OEM dependency
4. Fleet simplification (requires customer education / incentives)
After my meets with operators I also got to meet great teams at Arrow Aviation and PHP. Maintenance and distribution are alive and well. In good part, as a result of the majors stabilizing. Over my trips there I noticed that Lafayette in general is quite an integrated economy. Neighbours sway together according to the Price of oil and Wins by the LSU Tigers and the UL Ragin Cajuns!
So between the ongoing businesses and delightful conversation with the professionals I knew, I got to meet new teams and benefit from the more than welcome heat and sunshine that is so familiar to the great State of Louisiana and its warm people. In closing, I would also highly recommend the Café’ Vermilionville in the heart of Lafayette. It serves up a fine local cuisine, of which you need to taste the slightly spicy turtle soup and the creamy coco snapper. The owners truly reflect the charm and heritage of the area and the historic building they own and manage with distinction. In sum, it was a great trip to an improving market, coupled with a warm taste of Louisiana.
Optima Aero Provides Long Term Engine Lease to UI Helicopter & South Korea Forestry Service
January 3rd 2018. Optima Aero inc and UI helicopter CO Ltd have entered into a long term agreement in which Optima Aero will lease PT6T-3B engines to UI Helicopters CO Ltd in the context of a long term contract with South Korean Forestry Services to support Bell 412.
This new long term engine leasing service by Optima Aero, allows operators to avoid large capital investments related to engine overhauls while benefiting from reasonably priced expensed payments over a 3 to 5 year period. The program also includes the full coverage of Optima Aero’s Optimal Power Support, an industry leading hourly maintenance program. The engines were overhauled by Mint Turbines LLC and had exceptional performance on test.
“Optima Aero tailored an advantageous long term lease offering that enabled UI Helicopter to adjust to customer requirements. Once the service concept agreed, Optima Aero also delivered the engines quickly”
– Jaeyeon Hwang, Production Director at UI Helicopters
To read the complete press release on Vertical Magazine, click here.
HAI HELI-EXPO 2018 – COME MEET US AT BOOTH C941!
It is almost that time of the year again! HAI Heli-Expo 2018 waits around the corner and at Optima Aero we are looking forward to the event more than ever.
Since the last event in Dallas, we have successfully increased our reach to South-east Asia and Africa, providing solutions for more customers than ever. Also, ever growing inventory for more recent engine models, such PT6C-67C and PW206/207 series engines, allows us to meet our customers’ evolving requirements.
We look forward to welcoming each one of you at our booth in Las Vegas! Get to know us or reconnect, we look forward to hearing your story.
Off to New Horizons
In an effort to develop existing relationships and increase support for the local helicopter industry, Optima Aero is taking part in the Government of Quebec’s Trade Mission to Israel and West Bank May, 19-25.
Accompanying the Prime Minister of Quebec, Mr. Philippe Couillard, the Minister of Economy, Science and Innovation, Ms. Dominique Anglade and several other companies from the province has proven in the past to be a great means by which to establish new relationships and develop innovative ideas.
If you are interested in meeting us during our visit, please give us a call or write to us!
HAI Heli-Expo 2017 – Dallas
Come and visit us at booth #2600!
Being a first time exhibitor HAI Heli-Expo this year in Dallas, Optima Aero is proud to share this milestone with its clients and partners.
In 2017, Optima Aero offers you the same industry renown expertise and commitment to its clients, but with an all new company branding and an evolved service portfolio featuring new and industry exclusive asset management solutions. In short: we are ready for your challenges!
We warmly invite you to come and stop by our booth and discover Optima Aero. See you in Dallas!