Bringing their A-game to part-out and leasing
With new investor Egeria, a host of industry awards and an online catalogue that’s updated every five seconds, Netherlands-based APOC Aviation is leading the way in terms of growth within the industry. Max Lutje Wooldrik, its CEO, spoke to LARA’s Glenn Sands on why things are all good.
Download a PDF of the article from the December 2020/January 2021 issue of Low-Fare & Regional Airlines magazine.
As one of the newest companies in the competitive world of aircraft leasing, trading and part-out, APOC Aviation, situated next to Rotterdam Airport, buzzes with Dutch enthusiasm.
With a determination to create one of the most respected companies within its field of aviation, APOC has embraced IT systems and innovative software. It sees this focus on new technology as enabling it to react more quickly than its competitors at a highly demanding time for the commercial aviation industry due to COVID-19.
Max Lutje Wooldrik, CEO of APOC Aviation, says it’s been a tough time but that his company has adapted superbly: “Much like the rest of the world, it’s been a scary time, as we saw a nearly 97% drop in revenue in just one month due to the impact of COVID-19. But we managed to focus attention on the parts of the business that weren’t being hit so severely, which is our leasing side.
“It was strange as, during this time, our engine division and landing gear business was actually doing quite well, and we have continued to build on its recent success. I’m extremely happy that we had the ability to diversify when we needed to. It was a perfect example of not putting all your eggs in one basket, as we’re not just dependent on the parts sale side alone.”
The need to remain flexible within the market has proved a key driver for Wooldrik in moving APOC forward.
“It was only last year that we started our engine division and just 12 months earlier we began our landing gear business, with the long-term idea of becoming a one-stop shop for customers. It means that we can offer our clients more than just parts alone, we can help them with leases and repair management which all worked very well for us,” he said.
As other leasing companies have kept it a secret that they are finding things tough, APOC has been able to adapt to the challenging times and has secured a lot of deals and increased its assets on lease.
Wooldrik explained: “A visit to an engine shop can be expensive – typically it’s around a couple of million dollars to overhaul an engine. So, what we are seeing now is that a lot of airlines, instead of spending this money on an overhaul, they just lease an engine from us for a couple of months before the market returns to normal. I’m sure that when things do get back to how they were, they will start putting their own engines through the ‘shop’ again.
“We are being quite selective at the moment, in preparation for when the flights return to normal. We’re buying airframes at very discounted prices at present so when the market recovers – although I expect that it won’t return to the level it was pre-COVID – we should still be able to generate a good profit. We are actively preparing for the ‘good times’.
“This period has also allowed us to automate our processes even more. The first few months for the industry were extremely slow, so we took the time to evaluate our processes and to make them more efficient. It was simply a tweak here or there, and we introduced new software in some stages. The result is that we’re now able to handle a higher flow of parts with the same number of staff.”
Wooldrik is totally committed to introducing the latest automation software to APOC, which allows its online parts catalogue to be updated every five seconds.
“I think it’s one of the main drivers behind our success. I would say we’re a very data-driven company – we use a lot of data to make certain decisions. So, even if we’ve never seen a particular part or we’ve never sold it, we still have a lot of information about it, and we have a fairly good idea what the market value of that part is. It helps us determine the right value for certain parts, and also what aircraft we should or shouldn’t buy.
“We’re always looking at specific parts related to the Boeing 737NG or the Airbus A320 family – it just makes sense as it accounts for 45% of all aircraft flying. It’s a good move to have an inflow of these parts, and our stock has to be very liquid as there are always operators looking for this material. That being said, we also want to focus on any opportunity if it arises – we don’t say no!”
As the airline industry waits patiently to get back to some semblance of normality, Wooldrik is honest about the outlook for the parts side of his business: “It’s definitely slower due to COVID-19, and the transactions done by other companies are being heavily discounted by as much as 60–70%. Of course, we get clients who want a similar deal, but we aren’t in a similar position. We can stand firm, and I am not in the position of having to drastically reduce the prices of our stock. All that will happen is our stock levels would be depleted, and when things do return to normal, we won’t be in the position to supply items, and we will be at a significant disadvantage to our competitors. It makes more sense to wait for better times.”
In contrast to the tone of general media reports, Wooldrik remains enthusiastic about the leasing market, which has remained buoyant.
“The trade in landing gears and engines is pretty strong. With the former, it’s very much a niche market, and there’s not a lot of people focusing on these at the moment, so we are putting significant focus on acquiring more items,” he said.
With plans to expand the business globally and the green shoots of a commercial aviation recovery beginning in Asia, APOC is keeping a careful eye on the region.
“We are looking towards Asia as there has been a spike in demand there right now, compared to Europe,” Wooldrik explained.
“I think with the news of a vaccine coming along, things will return to normal more quickly for part suppliers as the demand will be there. For operators and actual flying, I believe this may well return more quickly than people think, but will the same number of operators be out there? When they do start again, airlines are going to be strapped for cash and the need to buy new items may not be possible. With a common interest in saving cash where they can, it could be great for our industry.”