Lufthansa shelves $40 million expansion

MANILA, Philippines  — Lufthansa Technik Philippines (LTP) has suspended the construction of its $40-million hangar expansion in Pasay City to preserve cash in order to maintain its existing workforce.

Eunice Gan, LTP corporate communications manager, told The STAR that construction of the new hangar called Hangar 1A at the Villamor Airbase has been put on hold as the company is currently prioritizing expenses, a big part of which is employment.

The expansion, which will enable LTP to service more and bigger aircraft, was originally scheduled for completion by October this year.  It is now seen to be completed by the middle of next year “if things go well.”

“We had to reprioritize because as you know, cash is king at the moment. So income is down, we have expenses to pay, and we want to maintain our people so we reprioritized,” she said.

LTP, a joint venture of Hamburg-based Lufthansa Technik AG and Lucio Tan’s aviation support service provider MacroAsia Corp., commenced construction of the hangar in September last year.

“Before, Hangar 1A was very urgent because of the boom of the travel industry and a lot of planes needed to be maintained and we saw that there’s going to be demand for space for hangar so we were building that in anticipation of that. So it’s not too realistic for us to push through with that and send our money on that when there is no line of aircraft to park in it,” Gan said.

At present, LTP is at 60 percent of its target workload.

“We negotiated with our customers before the beginning of the year and the whole idea is to fill out the hangars the whole year. At the moment, of all those contracted, we’re running at around 60 percent of target. That is of course still soft because from the start of this pandemic, there have been contracts that were delayed, postponed or to certain extent, canceled,” Gan said.

Gan said the company’s priority at present is to keep its 3,300 workforce as much as it can amid the challenges brought about by the COVID-19 pandemic to the aviation industry.

“But because our business depends on airplane mileage and right now, the majority of airplanes are grounded,  they’re not incurring mileage so they will not need maintenance,” Gan said.

LTP last month let go of 23 mechanics as the company decided not to regularize probationary employees.

“We were unable to regularize much of those on probationary. If we were in better times we would have regularized them. But we can not afford that anymore,” she said.

Gan said LTP has provided various forms of support to these former employees such as providing them with workshops that allows them to look for other sources of employment, as well as setting up an online learning system for them.