LTP Grows Manila Hub

22 July 2019

Lufthansa Technik Philippines, the country’s largest aircraft maintenance, repair, overhaul (MRO) operation, mulls expansion of its facilities in Manila with $40 million in new investments that would hire 300 workers in addition to the existing 3,200 headcount even as it noted that the tax and fiscal incentive package granted by the Philippine Economic Zone Authority (PEZA) helps them cope with stiff competition in the Asia Pacific region.

Trade and Industry Secretary Ramon M. Lopez revealed this after his meeting with Lufthansa President and CEO Elmar Lutter.

According to Lopez, the company is planning a 9,000 square meter expansion in the area worth $40 million and will add 300 jobs. The expansion will be completed 13 months after they award the contract.

At present, Lufthansa enjoys fiscal and non-fiscal incentives. PEZA-registered enterprises are entitled to income tax holiday (ITH) and 5 percent gross income tax after the ITH. They are also entitled to zero duty importation of capital equipment, tax deduction on the training expenses and employment of foreign nations.

During the meeting, Lutter informed Lopez that the incentive package “helps Lufthansa deal with challenges in such as stiff competition in the Asia Pacific Region and the logistical costs of operating in an island country.”

Lopez said he fully supports Lufthansa’s MRO expansion plans. These expansions, he said, will help the Philippines become and aerospace and MRO hub in the Asia Pacific.

“The Philippines is positioning itself as the hub for aerospace manufacturing and aftermarket services in the Asia Pacific Region. We have the young, educated, and highly-trainable workforce that is a boon to investors. If we achieve this goal, we can increase our high-value exports and provide decent jobs to more Filipinos,” said Lopez.

Lutter said that the global MRO market is expected to continuously grow by 4 to 5 percent per year, one third of which will come from the Asia Pacific Region.

Lutter further said that job opportunities in other industries and the growing global demand for MRO skilled workers may lead to a labor shortage in the Philippine MRO industry.

Filipinos, he said, are known as skilled aircraft mechanics not just in the Philippines but in the world. “The competitive advantage of the Philippines is its people,” he added.

Lufthansa Technik Philippines, a joint venture of Lufthansa Technik AG (51%) and MacroAsia Corporation (49%), is located at the center of Southeast Asia, within a four-hour flight radius of major international hubs in Asia such as Singapore and Hong Kong. MacroAsia is owned by taipan Lucio Tan, who owns the country’s flag carrier Philippine Airlines.

Within a special economic zone at the Ninoy Aquino International Airport, its facility occupies a total area of 229,000 square meter lot in Villamor Airbase employing 3,200 people. It maintains 3 hangars capable of servicing up to 6 wide-body and 3 narrow body aircraft at a time, and 9 apron parking slots.

Its hangars are equipped with platform systems, overhead cranes, and engine, tail and wing docks. Modern and process-oriented workshops support aircraft overhaul, major modifications, cabin reconfigurations, and aircraft painting.

Based on its website, the company specializes in base maintenance for the A320 family, A330, A340, A380, and Boeing 777 aircraft types. It provides line maintenance services to a wide range of customers. The base maintenance service spectrum includes cabin reconfiguration/retrofit programs and lease return checks available as a stand-alone product or integrated into long-term contracts.

It is precisely this capability that has enabled Lufthansa Technik Philippines to successfully implement the A330 cabin reconfiguration project which contributed to PAL’s achievement of their upgraded 4-star airline rating from Skytrax.

Through our satellite offices in Cebu, Clark, Davao, Palawan and Aklan, the company provides aircraft line maintenance support to domestic and international airlines.