Sky's the limit at jet service unit of HNA Group

HNA Aviation Technik Co Ltd, the aircraft maintenance and engineering subsidiary of HNA Group, plans to be listed independently, the company's chief executive officer said.

The company does not have a specific timetable for the listing, but it is actively preparing, said Cao Fenggang, vice chairman and CEO of HNA Technik.

"The process will also be affected by some uncertainties in the stock market, but we are well-prepared, as the company's management has already passed the review," he said.

HNA Technik's income was more than 1 billion yuan ($164.1 million) with a 20 percent year-on-year growth in 2012, and its income will be 1.51 billion yuan this year, Cao said.

But HNA Technik has to work to enlarge its business from airlines outside HNA Group to improve its profit margin.

HNA Group, parent company for 14 airlines, contributes more than 90 percent of HNA Technik's business, and its profit margin is 5 to 6 percent, Cao said.

Passengers were seen waiting at the counter of a services outlet of HNA Group in Haikou, Hainan province, Aug 15, 2013. [Photo / icpress.cn]

"We are working on enlarging the business through other airlines, which is expected to account for 40 percent by 2020," he told China Daily.

Along with the fast growth of the aviation industry in China, the aviation maintenance, repair and operating (MRO) industry has also expanded.

By the end of 2012, there were 1,941 aircraft registered in China, and the market size of the aviation MRO industry will reach 45 billion yuan by 2015, according to the Civil Aviation Administration of China.

Sichuan Haite High-Tech Co Ltd, the first listed aviation MRO company in China, saw a 56.87 percent profit margin in 2012 from its aviation maintenance, repair and manufacturing business, said in the company's finance report.

"China's aviation MRO market had the fastest growth in the world, although the production value of domestic companies accounted for no more than 25 percent of the whole market," said Liu Ruibo, a researcher for the civil aviation industry from Qianzhan Research Institute, based in Shenzhen.

Engine repair, line maintenance, aircraft modifications and parts replacement were the main sectors of the industry, and by the end of 2010, there were 389 aviation MRO companies in China, according to Qianzhan Research.

But competition in the market is going to get stiffer, as the larger airlines in China are expanding their MRO facilities.

Guangzhou Aircraft Maintenance and Engineering Co Ltd, a joint venture controlled by China Southern Airlines, invested 580 million yuan into its second hangar, which opened in November, and the company also plans to build a third one.

Aircraft Maintenance and Engineering Corp (Ameco Beijing), China's largest and oldest civil aviation MRO company and a subsidiary of Air China, has seen an annual income growth rate of 20 percent in its airframe heavy maintenance business from international clients in the past five years, the company said.

HNA Technik, as a latecomer in the industry, has had to explore more niches in the marketplace.

Engine repair, business jet repair and aircraft modification all will be targeted by HNA Technik in the future, Cao said, as almost all of the company's current clients are from line maintenance.

"We can see a huge market in business jet repair in the future, and our income from this business is expected to be 20 million yuan in 2013," he said.

HNA Technik entered a joint venture for business jet MRO with Gulfstream Aerospace Corp in 2012.

HNA Technik also provides Wireless Local Area Network cabin service, which is a popular feature in the global aviation industry.

HNA Technik is the first Chinese company owning intellectual property rights for the WLAN system, and the company will launch the third generation of the system next year.

This year, the company is fitting 22 aircraft both from HNA Group and other airlines with the system.

HNA Technik's WLAN system also can be easily upgraded to air-to-ground WiFi through satellite or bases on the ground once the authority approves, said Zhang Yong, manager of the company's design and modification center.