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Eastern push

The sale of Magnetic MRO to a Chinese company will produce a boost to its established strategy, as Ian Harbison finds
At the start of 2018, it was announced that Magnetic MRO, based in Tallinn, Estonia, had been acquired by Guangzhou Hangxin Aviation Technology (Hangxin) for €42 million following the sale of 100% of the shares by the previous major shareholder, private equity firm BaltCap, together with minority shareholders. Hangxin was established in 1994 and has five main core businesses: component MRO, airborne equipment R&D, aviation test equipment R&D, aircraft retrofit programmes, and aircraft data analysis and application. It serves over 50 airlines in Asia, Middle East, Europe and North America. 
Magnetic MRO CEO Risto Mäeots said at the time: “Magnetic MRO management has been actively looking for opportunities to expand into Asia, the highest growth market in aviation. Hangxin, with its existing geographical presence and service portfolio, is complementary to Magnetic MRO, creating substantial synergies and new business opportunities.”
He adds that most newcomers find their way into aviation with capital to be deployed and lacking know how but, at Magnetic MRO, the company is coming in the opposite direction: it has decades of know how which it can transform into added value in asset management. It is looking at asset packages and complex projects, anything which an average asset trader would skip due to risk tolerance – Magnetic MRO aims to embrace complexity and turn it to its advantage. This is perfectly illustrated by the fact that, in the last five years, C check business has gone from 95% to 22% of the company’s turnover. 
This diversity is reflected the company’s subsidiaries. Magnetic Parts Trading is a joint venture with Crestline Investors. This was formed at the end of 2017 with the acquisition of a package of four Boeing 737-800 airframes and ten CFM56-7B engines. This first package acquisition has now been followed by several new ones. Crestline Investors provides the majority of capital needs, whereas Magnetic MRO acts as the exclusive asset manager. He says the business will continue its organic growth path complemented by some selected mergers and acquisitions. 
EngineStands24, another joint venture, this time with Kühne + Nagel, was formed in 2016 and specialises in the lease, trading, logistics and storage of aerospace engine stands. These include CFM56-3, CFM56-5A/B, CFM56-5C, CFM56-7B, CF6-80 and V2500, with CF34-8, CF34-10 and LEAP-1A/B to be added in the near future. It has a hub in Amsterdam, will add Dubai in 1Q19, and is looking at further locations in the Southeast Asia. Customers can use an online tracking system to monitor progress.
MAC Aero Interiors was acquired in 2016. The company is showing stable growth and has entered into the Asian and Chinese markets.He is also interested in aligning with the OEMs, one of the latest ongoing being the FHS-TSP programme from Airbus. To top it all, the line maintenance business is now heavily focusing on expansion into widebody aircraft.
The capabilities which Magnetic MRO has developed can work across several areas of the company simultaneously. In August, a full delivery support of Boeing 737-800 (MSN 32604) was executed. The aircraft was previously operated by Hainan Airlines and was delivered to a Go2Sky with a fresh EASA Airworthiness Review Certificates (ARC) recommendation, requiring 16 years of Chinese operations and maintenance documents to be checked. The entire transformation process took place in Tallinn and included painting, DOA, CAMO, interior workshop, line and base maintenance backing, as well as seat shop support together with MAC Interiors.
Similarly, Magnetic MRO provided full asset management support for Airbus A320 (MSN1413) by upgrading and delivering the aircraft to SmartLynx Airlines. This involved building up a complete aircraft history, reviewing records and restoring back-to-birth traceability of crucial components as well as going through major maintenance work packs. The project resulted in successfully issuing an ARC recommendation for an aircraft with a complicated history. In parallel, DOA support included livery design, LOPA, emergency exit lighting and floor cover change.
However, base maintenance has not been overlooked. There have been two major contract wins: it will provide 23 heavy maintenance checks on Airbus A320neo aircraft for SAS from autumn 2018 to winter 2020, while Austrian Airlines will take up 75% of all hangar slots for Airbus A320 Family work during the 2019/2020 winter season. 

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