It is no secret to anyone that the airline industry interest to reach the Latin American market is increasing but also faces a difficult economic scenario across the region, especially in some development areas such as Brazil, where the decline in the local currency and its negative impact on emerging economies, have generated uncertainty among actors in this competitive sector.
Despite this, several companies in the industry continued to invest and trust in a promising future of aviation market in this region. Notable among this is Kellstrom Materials, a technology company with more than two decades delivering solutions to airlines and MROs in the US, Europe, Asia and now, expanding their presence in Latin America with innovative proposals.
To answer these and other questions, AeroLatinNews had the opportunity to talk with Oscar Torres, CFO of Kellstrom Materials, about their future plans, potential investments and strategies to meet this new challenge.
Given the current economic crisis hitting Latin America, How is KM dealing with this scenario?
Obviously, Kellstrom Materials has to manage the economic exposure to all regions in which it operates. However, we also understand that these conditions have varying impacts on individual market participants. Kellstrom offers our customers solutions that help lower their operating costs and therefore put them in better positions to thrive during these economic cycles. Ultimately these solutions are intended to reduce inventory and maintenance costs through exchanges, leasing, repair management, and other cost effective spare parts solutions.
Does it affect your plans for the region?
We believe it affects Kellstrom in a positive way. It provides Kellstrom the opportunity to demonstrate to our customers that we are willing to work with them during these economic cycles and provide solutions to help them succeed.
This year Kellstrom Materials joined as an affiliate member to the Latin American and Caribbean Air Transport Association (ALTA), it is this part of a strategy to expand your operations in Latin America and Caribbean?
Kellstrom Materials believes there are tremendous opportunities in Latin America. Over the past several years, we have seen the emergence of larger, more stable, and more competitive airlines combined with a growing presence of low-cost carriers in the region. We want to be an integral part of supporting those operators and helping them reduce their maintenance and supply chain costs. Kellstrom Materials has always viewed ALTA as an integral part in bringing together Airlines and service providers throughout the region. As we continue to expand our offerings we felt it was important to become an ALTA member as we believe that through stronger relationships we can help the Airlines achieve greater success.
What are your plans for 2016? Can we expect new investments to be made by KM?
Kellstrom"™s plan for 2016 are to continue to dramatically increase the extent of our product offerings. Our customers are asking for partners that can provide total support for all of their aftermarket needs and we believe we offer such solutions. Earlier this year we launched a trading and leasing business unit for both aircraft and engines. Our focus is on the B737NG, A320 and the engines powering these airframes such as CFM56-5 & 7 and the V2500. This group will allow us to provide our customers short term and long term availability of whole engines on lease as well as whole aircraft or engine for sale or exchange in support of our customer"™s fleet management operations. We also understand the need to reduce cost on older platforms so our exchange programs and repair management along with engine exchanges continues to provide huge savings to our customer base. We are also investing in human capital to better serve, our customers. We have been adding individuals across all levels of the organization to improve our access to the market. We are committed to our future growth and the level of service it will provide to our customers.
Do you have any plans to expand your leasing services to the Latin American region?
Yes, in fact, we recently hired a new individual into our leasing organization, Mr. Peter Curbelo, who has extensive experience in Latin America and the Caribbean. Mr. Curbelo is spearheading the aircraft and engine trading division for Kellstrom Materials and has placed a significant amount of focus on opportunities in the region.
How do you ensure KM competitiveness and profitability in each of its business units in such a volatile sector?
At Kellstrom Materials, we have a very talented group of individuals throughout the organization. These individuals provide tremendous knowledge and experience of the industry, the regions and customers that they support, and the micro and macro factors affecting their businesses. This has consistently enabled us to thrive in spite of the volatility in the industry.
How do you evaluate, and how much importance do you give Human Capital?
As I stated above, Human Capital is our most important asset. We place tremendous value on their capabilities and contributions. We have personnel with years of experience in the aviation industry, commercial and defense, including experience at OEMs, airlines and cargo operators, repair and overhaul facilities and aftermarket support companies. We have also established programs to recruit new individuals into the organization that demonstrate tremendous potential. As an example, we recently visited career fairs at top aviation colleges in the US, Embry Riddle and Purdue University, looking to add young talented individuals with potential for significant growth. We strive to make Kellstrom Materials, the place where the top aviation professionals want to work.
What added value KM offers, in an ever changing sector and the constant emergence of new players and new alternative technologies?
Kellstrom Materials offers a full service suite of aftermarket product offerings to our customers worldwide. These products include various materials solutions including; OEM new and surplus parts, repair management programs, Fast Track Exchange programs, on-site material management or consignment programs. We also offer leasing and trading solutions including short term & Long term leases along with whole engine exchanges to avoid expensive shop visits. In addition, we provide various sunset fleet solutions aimed at enabling operators to effectively and efficiently manage their fleet changes and inventory assets. All of these products are designed to lower the overall operational cost of our customers and can be tailored to our airline/MRO customer"™ specific needs.
What"™s KM point of view in regards to the Low Cost carriers? Is KM looking to joining in in the low cost model?
Cleary low-cost carriers are a growing presence in the region, expanding services and bringing affordable air travel to more people and more communities. However, Kellstrom Materials provides equal cost saving opportunities to both the low cost carriers and the traditional legacy carriers and is a key partner to all airline and cargo operators and repair and overhaul facilities.
Tell me about the plans to provide credit lines to small airlines. Are you in talks with any carrier in the region?
Establishing credit lines requires commitments by both Kellstrom Materials and its customers. We evaluate each situation based on its own specific set of circumstances and try to develop ways to support all of our customers, big and small. Good communication and consistently meeting its commitments has allowed Kellstrom to offer appropriate credit lines to many of the smaller airlines in the region.