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Outsourced jet repair arrives in Tampa

The evolution of how airlines take care of their planes will soon be on display at Tampa International Airport.

Next week, Pemco World Air Services takes over a huge hangar abandoned in 2003 by then-bankrupt US Airways, leaving some 300 employees to move to hubs such as Philadelphia and Charlotte, N.C., or find new jobs.

The Dothan, Ala., company represents the new model of airline maintenance: contractors hired by airlines to take apart their jets and perform critical safety checks.

Pemco executives are tight-lipped about which customers will bring planes to Tampa. But the company identified Southwest Airlines and Northwest Airlines as likely candidates last year. The first plane should arrive this summer, and Pemco plans eventually to employ more than 400.

Carriers increasingly shifted work to contractors over the past decade. From 1996 through 2006, the share of maintenance dollars the top nine U.S. airlines spent on outside companies jumped from 37 to 64 percent, according to the Department of Transportation's inspector general.

It's all about money. U.S. airlines pay roughly $65 to $70 per hour for maintenance by employees. Repair stations in Latin America charge in the mid $20s, while domestic contractors like Pemco typically bill in the mid $50s.

The savings were irresistible as airlines lost a collective $41-billion in the wake of a travel slump caused by the last recession, compounded by the Sept. 11 terrorist attacks. With $3-a-gallon jet fuel costs rocking the industry, the pressure to cut maintenance costs has intensified.

Outsourcing was "the No. 1 issue" for US Airways in recent contract negotiations, said David Supplee, director of flight safety for the International Association of Machinists, which represents the airline's mechanics.

Unions, Democrats in Congress and even a former American Airlines boss are raising concerns about contract maintenance outside the country.

The Federal Aviation Administration, which regulates repair stations working on planes flown by U.S. airlines, has come under fire in recent years for failing to keep up with the growth of maintenance shops abroad.

The agency lacks enough inspectors to make the kind of checks that U.S. shops receive, says John Goglia, a former National Transportation Safety Board member. "Most foreign stations get one visit every two years when they renew their certificate," says Goglia, who worked as an airline mechanic and union official.

Other carriers moving work overseas puts pressure on American Airlines, which does little outsourcing, to follow suit, says Robert Crandall, the airline's former chairman and CEO. He thinks Congress should require maintenance on U.S. carriers to be done in the country.

"What we're doing is sending good jobs offshore for no good purpose other than to lower airline fares," Crandall told the Dallas Morning News. "I think that is stupid policy."

A change, however unlikely, would benefit Pemco. With roots in Alabama dating to 1951, the company was spun off last fall from parent Pemco Aviation Group, now strictly a military contractor. Sun Capital Partners, a Boca Raton private investment firm, paid $43-million for the company.

CEO Wake Smith says FAA oversight of foreign repair facilities is "absolutely an issue." Pemco gets the same kind of scrutiny as maintenance operations run by the airlines, he says.

"We are compliant with the same regulations and inspected by the very same FAA inspectors as the airlines," Smith says.

Airlines have long contracted for engine work, typically with GE, Pratt & Whitney and other manufacturers. Carriers born after deregulation in 1979 used companies that specialized in heavy maintenance from the start, Smith says.

Established carriers with unionized work forces took longer. The costs finally caught up, Smith says. Not just salaries, but also huge hangars that can sit idle during the busy summer travel season when airlines don't schedule heavy work that can take a jet out of service for a month.

"Airlines are, by and large, pretty inefficient suppliers of airframe maintenance," Smith says.

Supplee, the union official, won't criticize operations like Pemco. He once worked at the Tampa hangar, where mechanics earned more than $60,000 a year including overtime.

Steve Huettel can be reached at (813) 226-3384.

Outsourced jet repair arrives in Tampa 03/24/08 [Last modified: Monday, March 24, 2008 8:38pm]
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