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Helping Airlines Reduce Costs

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Oscar E. Torres, President and Chief Operating Officer

Oscar E. Torres, President and Chief Operating Officer of Kellstrom Materials, is responsible for all aspects of the company’s worldwide operations.  Prior to this, he was Chief Financial Officer of Kellstrom Aerospace, the parent company of Kellstrom Materials. Before joining Kellstrom Aerospace, Torres held various positions with KPMG LLP.

In this post, sponsored by Kellstrom, Torres talks about the current and future state of the airline industry.

Question: What is the biggest challenge your company is facing this year? The next 10 years?

Answer: Kellstrom Materials provides aftermarket parts and repair services to commercial aviation operators, and maintenance, repair and overhaul companies.  Our business is primarily driven by the demand for engine and airframe heavy maintenance, phase checks and line maintenance.  Companies are speeding up the retirement of older, higher maintenance aircraft, creating a younger global fleet due to significant improvements in the reliability and fuel efficiency of new aircraft and engines, a global low interest rate environment, which has reduced the cost of new aircraft and engines, as well as an increase in the production rates of new aircraft. Clearly, the global aircraft fleet is growing at an attractive rate.  However, the growth rate for aftermarket suppliers is not as robust due to the reduced maintenance requirements of a younger fleet and so companies like ours are continuing to identify new ways to support both new and older aircraft.

Q: What are the one or two most significant changes the aviation industry will undergo in the next 10 years, and how do you plan to deal with them?

A: Once again approaching it from an aftermarket supplier standpoint, I believe that airlines will get more aggressive about attacking the non-fuel cost related aspects of their cost structure.  Because maintenance costs are high, this is an area that I believe will continue to see significant changes over the next several years.  Airlines are requiring more cost effective support and are looking to companies like Kellstrom to dramatically reduce their total cost of ownership.  We help airlines do this in several ways.  One example is our recently announced Fast Track Exchange (FTE) Program.  With this program, we have partnered with airlines and overhaul facilities to provide 24-hour access to a dedicated inventory pool of critical components. This enables operators to have the parts they need to make sure their aircraft are operational without having to make investments in those parts.

Q: If you had the power, what’s the one aviation industry issue you would resolve today, and how would you do it?

A: Aircraft and engine manufacturers have done an excellent job of creating more fuel efficient, less maintenance intensive, quieter and more comfortable aircraft.  Aftermarket parts and services providers like Kellstrom continue to identify ways to reduce cost and increase efficiency for operators of aircraft through technology and providing more creative product offerings.  However, the infrastructure, primarily the air traffic control and communications systems used to support the growing number of aircraft, has remained relatively unchanged for decades.  Improved satellite communications and other related technologies are available today that could dramatically improve the efficiency of routes, resulting in improvements to operating costs, safety and the environmental impact of flight.  Unfortunately, one factor that makes this problem particularly difficult to solve is the need for private-public partnerships across the globe.  While I may not have the solution at this time, this is a dynamic issue that needs to be addressed.

Q: What are the key attributes of an aftermarket parts company necessary for its success in the future?

A: The foundation to success is based on a commitment to providing the highest quality products and services, and excellent customer service. Because of the increased focus on maintenance and supply chain costs by the airlines, we believe that our customers are looking for a partner that has a broad range of capabilities, skills and solutions to address their increasingly complex material requirements in a cost-effective manner.  This breadth of capabilities includes:

  • Technical expertise across different platforms (airframe and engine) and OEMs (Airbus, Boeing, GE, Pratt, Rolls, etc.);
  • Offering a wide range of solutions including supply of new OEM parts, refurbished surplus parts, repair management, rapid access to exchange pools, etc.;
  • Partnering with OEMs, MROs, Airlines, etc. to offer increased capabilities.

In short, we believe that those companies that offer the airlines increasingly diverse, cost-effective solutions to their parts and repair services requirements will be positioned for success.

Q: What’s your formula for recruiting and retaining top talent?

A: Like most businesses, the true value of the company resides with its people.  While Kellstrom prides itself on its product offerings, inventory position and information technology capabilities, our largest asset is the knowledge, experience and reputation of our people.  Retaining our dedicated employees is a primary focus of the management team. Highly motivated and customer-focused employees provide a competitive edge through anticipation of customer needs and providing innovative solutions to everyday issues. Solving customers’ problems creates an engaging, motivational work environment.

As far as recruiting talent, Kellstrom has enjoyed a very good position in the industry since the early 1990s.  As such, our employees have very extensive relationships in the industry and the Kellstrom name is very well recognized.  This allows our employees to be the greatest asset in identifying and recruiting talented individuals to join our team.