HEICO / Wencor: MRO Synergies

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How much of an advantage can Soundair get by being part of Wencor, or any MRO shop? Do they get an advantage or an up-tick in volume because they are part of a bigger group?

The main advantage of being a part of a bigger group is increased bandwidth. What I mean by that is there are certain customers, like a JetBlue. JetBlue tends to minimize their vendor base, they want to work with five or 10, so there's a couple of ways in doing that. Working through an integrator, like AAR or Lufthansa Technik or somebody like that, or through consolidation have more to offer so that when the RFP comes out, you have a bigger breadth of parts to offer. That's a real advantage there from a Wencor perspective.

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How does the pricing work?

Pricing is really based on a lot of historical data. Ideally, if you have got a part number, your shops will look at it based on our historical data and the volume and say, we think we can do it at this. It can be priced in different ways. There's what we call a three-tier pricing, there's light test and inspect price, your repair price and your overall price. There could be a flat rate on higher volume parts, so you might have a part that they remove 500 a year and you just give them a single price every time it comes in. Then you could get into an even bigger agreement which is like a power by the hour type price, which is what JetBlue tends to go for. That's where the increased bandwidth helps somewhat because like a Barfield or Lufthansa or some of these guys have had more volume and data, to where they can bid a broad scope of parts at a cost per flight hour, versus an individual component price, if that makes sense.

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