Silver lining amid dark clouds hanging over SAirGroup

SR Technics Californian subsidiary has become the state's biggest foreign investor Keystone Archive

The SAirGroup, parent of Swissair and Crossair, has had a bad few weeks, after revealing record losses for 2000. But despite the doom and gloom, the future for some of the group's divisions remains bright.

Last month’s news that SAirGroup had chalked up record losses of SFr2.9 billion ($1.71 billion) drove the company’s share price to new lows, and has now sparked an investigation into its bookkeeping practices.

But there are parts of SAirGroup that are highly successful. What has gone practically unnoticed is the inauguration of a plant in the Californian city of Palmdale, which is to specialise in aircraft conversion.

SR Technics America, a subsidiary of the SR Technics group, has won a contract from Boeing to convert more than 50 DC-10 aircraft into modern MD-10 dedicated freighters. The first was recently delivered to the courier firm, FedEx.

According to Governor Gray Davis, SR Technics has been the biggest foreign investor of California over the past 10 years.

In a near record time of seven months, the first DC-10 was outfitted with a new two-man cockpit to replace the aircraft’s original three-man version. The “new” plane includes the most modern technology with Boeing’s Advanced Common Flightdeck and has been rewired throughout.

The president and chief executive of the SR Technics group, Hans Beyeler, told swissinfo that the reasons for the conversion were very simple.

“The hull of a DC-10 is enormously rugged and is good for another 10 to 20 years. But the systems and performance are outdated so we build essentially a new aircraft into an old hull,” he said.

Beyeler has said he’s pleased at the expansion of the business. “The rapid development of our US strategy gives us a jump on the market. This will help us to establish additional product lines and to further pursue our global expansion strategy.”

SR Technics has invested $50 million in Palmdale, which created 350 jobs in less than a year. The facility hires an average of 20 additional staff every two weeks.

The company has also spent a further $50 million taking equity stakes in three other California-based firms, in the sectors of aircraft and engine maintenance.

“We will start this year to branch out from the Boeing contract. We are in advance negotiations with several carriers to take over part of their technical activity or even a more comprehensive technical responsibility for part of their fleets,” Beyeler told swissinfo.

Despite the good news, Beyeler says there is still a long way to go to profitability.

“We are in a business where you need enormous investments and only a sufficient load can make a business profitable to carry these investments. This is usually a three to five years process,” he said.

“Our idea is to have the fastest track to profitability but even with this we will need two to three years,” he added.

by Robert Brookes