‘Perfect timing’ for expansion, says Dublin Aerospace chief Conor McCarthy

Maintenance company bucks trend and focuses on industry turnaround and recovery

 Dublin Aerospace chief executive Conor McCarthy at the company’s  maintenance facility in Dublin Airport. Photograph Nick Bradshaw

Dublin Aerospace chief executive Conor McCarthy at the company’s maintenance facility in Dublin Airport. Photograph Nick Bradshaw

 

Just days after announcing that it was hiring 29 apprentices, aircraft maintenance specialist Dublin Aerospace confirmed that it was opening its first British base at Exeter Airport, where it would “immediately” take on 100 mechanics and engineers.

All this against the backdrop of a global pandemic that has set aviation back years.

“We see this as perfect timing,” says Conor McCarthy, Dublin Aerospace chairman and chief executive, of the Irish company’s expansion.

He explains that the aircraft on which its Exeter operation will focus, turbo-props made by European player ATR, along with regional jets manufactured by Bombardier and Embraer, are used on the commuter and domestic routes likely to recover quickest from the havoc wrought on air travel by Covid-19.

Dublin Aerospace had been on the hunt for the right acquisition for some time, McCarthy confirms. “We have been looking for the last four to five years for an opportunity,” he says, adding that it had been outbid on a few occasions.

The company already works on Boeing 737s, favoured by the likes of Ryanair, and the Airbus A320 and A330 models, flown by Aer Lingus among others, in Dublin and at its new landing gear facility in Ashbourne, Co Meath. So the British operation will add a new business line as well as opening up a new territory.

At home, hiring 29 apprentices will ensure that Dublin Aerospace has workers into the future. “We have a top class bunch of professionals working here, but they are getting older and we are also growing,” McCarthy explains. “So we have to make sure that the next generation is there to cope with natural attrition and to cope with future growth needs.”

Dublin Aerospace has a long-standing apprenticeship programme, which allows recruits to earn money while training to be aircraft engineers. McCarthy himself began his career as a “raw” 16-year-old apprentice with Aer Lingus, in the same hangar at Dublin Airport where his company is based. He rose to become chief executive of Aer Lingus commuter and also introduced the Airbus A330 series of craft to the then State-owned carrier in 1994.

In 2009, while McCarthy was in Asia, SR Technics, announced that it was closing what had been the old Team Aer Lingus maintenance operation in Dublin. “When I came back I met some of the people working here, including some of my former classmates,” he recalls. That prompted him to set up Dublin Aerospace, which began that year with 18 workers.

It now employs about 450 people during its peak winter months, when airlines send many of their craft for maintenance. This includes a core of 350 people and about 100 contractors who come in during its busy period. McCarthy was conscious that they were up against low-cost rivals in eastern Europe and elsewhere. “We had to figure out a way of being very competitive,” he says, “and we had to have everybody pointed in the one direction.”

Tight margin

The business operates on a tight margin, but to ensure that everyone pulls together, Dublin Aerospace shares 10 per cent of its profits every quarter with workers. Barring 2009, when it started, the company has been profitable every year since. “In this year, we will have paid out €250,000 in profit share,” McCarthy says. It paid €600,000 last year.

Workers are not the only people to have benefitted. Original backers, including Fernandes and aircraft manufacturer Airbus, have all exited with a gain on their investment, leaving McCarthy and a handful of private Irish investors. Those who cashed out include State agency Enterprise Ireland, which put in €6 million at 5 per cent interest at the beginning. Dublin Aerospace recently paid off the final €1.5 million due to the organisation on foot of that deal.

It has also paid €62 million in taxes down through the years, earning the State a handsome return for its €6 million in support. McCarthy gives a lot of credit to Enterprise Ireland. “They were a good business partner over the last 11 years, there’s an extremely good bunch of people working there,” he says.

Dublin Aerospace’s financial year ended on September 30th. For obvious reasons, it’s been a tough one. Turnover will be about €43 million, down from €50 million last year and far shy of the €60 million that the company hoped to generate. Profits will be €2.5 million, less than half what it made in 2019. “We didn’t lose money and that’s a positive,” McCarthy says.

Amazon’s cargo fleet

Working for “good airlines with strong balance sheets” helped steer the business through the initial months of the worst crisis to hit its industry. They include Ryanair, Aer Lingus and its owner, International Airlines Group, and Jet2. Dublin Aerospace also has a contract to maintain auxiliary power units for tech giant Amazon’s cargo fleet, which kept flying through the pandemic.

Nevertheless, the crisis is far from over. A burgeoning recovery in European aviation has slowed in recent weeks and infection rates are rising again. McCarthy is a member of the Government’s Task Force on Aviation Recovery, but criticises how it responded over the past five months.

“I think the condition of airlines is lost on policymakers,” he says. “There’s a lot of lip service being paid to aviation but I think frankly that very, very little is being done to support serious providers.”

He notes that Aer Lingus flew personal protective equipment to the Republic from China at the worst of the crisis. “If they are gone tomorrow because they could not operate, who’s going to fly in that stuff for us?” McCarthy asks.

The end of the temporary wage support scheme will aggravate the situation for carriers, some of whose revenues are down 95 per cent, he warns. “Airlines simply do not have the money to pay people.”

Travel restrictions

The Republic’s tight travel restrictions, which cut the green list to just four countries, have been part of the problem. However, the Government has pledged to join a proposed EU system that will class countries as green, amber or red, according to their infection risk. It is likely to require passengers to get tested for Covid-19 to confirm they are negative before travelling.

This is designed to end member states’ conflicting quarantine demands and put everyone on a standard overseen by the European Centre for Disease Control, hopefully easing the return of air travel. McCarthy acknowledges that it could be a step in the right direction. He is also “buoyed” by Tánaiste Leo Varadkar’s remarks, made at a press conference announcing Dublin Aerospace’s 2020 apprenticeship programme, that the Republic would adopt the system.

This and other signs give McCarthy some cause for hoping the industry can pull out of the crisis. Assuming the EU Council of Ministers adopts the framework this month, improving tests and the increased likelihood of a vaccine emerging next year, he believes the industry’s turnaround could begin slowly next spring. “At least, it will step back from the brink of the abyss and then there will be recovery,” he says.

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