Lufthansa to buy all of Aerospace

A Lufthansa subsidiary is poised to acquire the 50 per cent stake in Shannon Aerospace that it does not already own, it is understood.

The aircraft maintenance company based at Shannon airport is a joint venture between Lufthansa Technik and SR Technics, originally owned by the defunct Swissair. Expected soon, the withdrawal of SR Technics from the venture will follow its acquisition last month by the British private equity group 3i.

The likely consideration is unknown, but Lufthansa Technik's spokesman in Hamburg confirmed that the two parties were discussing a deal. Mr Bernd Habbel said: "I know that we are in talks about that and that we are interested but as far as I know the talks are still ongoing."

A spokesman in Zurich for SR Technics, Mr Dominik Mueller, stated only that the company was discussing the sale of its stake in the Shannon business. He would not comment on the likely timing of any deal.

The 3i takeover of the business is all but complete, although certain regulatory clearances are required.

Established in 1992, Shannon Aerospace employs about 850 people. After making only marginal profits in 2001, it warned earlier this year of difficult market conditions amid the downturn in the international aviation business after the September 11th attacks in the US.

The latest accounts filed in the Companies Office show that Shannon Aerospace had revenues of €63.76 million but made an operating profit of only €848,000, down significantly from €4.85 million a year earlier.

Some €33.7 million of the company's revenues were derived from contracts with Lufthansa and Swissair, which collapsed in the aftermath of the September 11th attacks. The remnants of the business were taken over by the regional carrier Crossair, which operates now as Swiss International Airlines, or Swiss.

After taking interest receivable and interest payments into account, the company's pre-tax profit was €1.31 million. This too represented a sharp deterioration from the 2000 result when Shannon Aerospace made a pre-tax profit of €5.22 million.

Provision for a €2.1 million dividend was made in last year's accounts. Shareholders' funds were valued at €41.85 million at the end of last year, down from €42.79 million a year earlier.

The company's chairman, Mr James King, and its managing director, Mr Martin Kaiser, stated in their annual review last April that 2001 was a "difficult year".

In their outlook for 2002, they stated: "The airframe heavy maintenance market has changed significantly since autumn 2001 and is currently of a very short-term nature. Consequently, a number of slots for 2002 are still available, although we are engaged in promising discussions with several potential customers."

They added: "The company is prepared for a difficult period, having the flexibility to take various aircraft types into all production lines."

The company specialises in performing heavy maintenance checks on Airbus A320 and McDonnell Douglas aircraft and Boeing 737, 757 and 767 carriers.