Delta Air Lines on Thursday unveiled a jet engine test facility it says is the largest in the world. It's the airline's latest bid to grow its aircraft maintenance business eightfold over the next five years by fixing its own planes and those of other airlines.
Delta TechOps, the carrier's maintenance unit, fixes and maintains Delta's fleet but also performs work for other airlines and the U.S. military. Delta TechOps was profitable last year, the airline said, but makes up a tiny part of its overall revenue. Last year it brought in more than $700 million, the carrier said in an investor presentation last December, compared with overall revenue of more than $44 billion.
But the airline expects to grow TechOps' revenue by $1 billion a year for the next five years, it said Thursday, and its making a big bet on recurring revenue from some of the biggest and newest engines. It's part of a growing trend among airlines which in recent years have diversified their revenue streams beyond airfares to include other businesses like co-branded credit cards.
Located at Delta's Atlanta headquarters, the 48-foot engine test facility can run mounted engines at full power and has a thrust capacity of 150,000 pounds, more than double that of Delta's previous test cell. Last August, the carrier opened a new engine repair shop nearby. Delta, which invested $100 million in the two facilities, also wants to use the test cell to evaluate engines that are still in development.
Delta is authorized by engine maker Rolls-Royce to fix and perform scheduled maintenance on some of its engines, and the new facilities can handle several of its Trent engines, including the Trent 1000, problems in which grounded some Boeing 787 jets last year. A Trent 1000 engine from Delta's joint venture partner Virgin Atlantic was the new engine shop's first repair last year.
Aircraft maintenance worldwide is expected to generate $82 billion this year and will likely rise to $116 billion by 2029, as the world's fleet of aircraft is forecast to grow 42 percent to more than 39,000 planes, according to consulting firm Oliver Wyman.
One challenge for maintenance shops is finding skilled workers to fill those jobs as airlines face waves of retirements.
"The demand will be there, the question is supplying the labor," said Oliver Wyman aviation analyst Tom Cooper.