ENGINE MAINTENANCE FOR MATURE AIRCRAFT

September 12, 2013

The information contained in this document is proprietary and shall not be distributed without the express written permission of GA Telesis, LLC

IATA 9th Maintenance Cost Conference Dublin 2013

Content

2

• ENGINE MAINTENANCE COST

• ENGINE PART OUT MARKET

• OUR SERVICES

• OUR LOCATIONS

• CUSTOMER VALUE

• COMPANY OVERVIEW

Intelligently Defining Aviation

3

INTRODUCTION GROWTH MATURITY DECLINE

Genx,GP7000, TR900/1000

CFM56-7B,GE90 TR700, CFM56-7B

CF6-80C2, TR800, PW2000/4000 RB211, V2500A1

JT8/9, CFM56-3 CF6-6/50, V2500A1

ENGINE LIFE CYCLE

Intelligently Defining Aviation

Financing / Leasing Costs

Fuel Consumption

Maintenance Costs

Shop Visit Cost vs. OWT

MRO Competition

DER/PMA Availability

Surplus / used parts

Wide Body Narrow Body Major Issue /Lever

JT9D / CF6-80C2/ CF6-50 JD8D / CFM56-3/5A / V2500A1 Fuel Consumption

CFM56-5C, PW4000-94/112/, T800 RB211, CFM56-5B, CFM56-7 MRO Costs

GE90, GE90Nx, Leap, T1000 CFM56-7B, CF34-8/10 Acquisition costs

ENGINE COST FACTORS

Intelligently Defining Aviation

5

MANAGING SHOP VISITS

ENGINE MAINTENANCE EXECUTION PHASES

• MAINTENANCE PLANNING

• CONTRACT (TYPE) SELECTION

• SUPPLIER SELECTION

• WORKSCOPE MANAGEMENT

• MATERIALS MANAGEMENT

Intelligently Defining Aviation

6

MANAGING SHOP VISITS

CONSIDERATIONS

• FEASIBILITY OF SHOP VISIT – PART-OUT?

• EXCHANGE VS REPAIR

• LEASE ENGINE MARKET

• A/C LEASE RETURN CONDITIONS

• GREEN TIME

Intelligently Defining Aviation

7

MANAGING SHOP VISITS

CONTRACT TYPE SELECTION

• PBH

• T&M

• NTE

• FIXED PRICE

SUPPLIER SELECTION

• OEM

• INDEPENDENT MRO

• AIRLINE MRO

• CONSULTANTS

Intelligently Defining Aviation

8

MANAGING SHOP VISIT COST

CONTRACT TERMS

• LABOR FLAT RATES

• REPAIR CATALOG

• HANDLING FEES / MARKUPS

• TEST CELL FEES

• LEASE ENGINE IF PROVIDED WITH SHOP VISIT

Intelligently Defining Aviation

9

MANAGING SHOP VISIT COST

DIRECT SHOP VISIT COST FACTORS

• REMOVAL REASON

• ENGINE CONDITION

• LLPs

• MOD STATUS OF THE ENGINE

• DESIRED BUILD – TIME TO NEXT SHOP VISIT

INDIRECT SHOP VISIT COST FACTORS

• ENGINE CHANGE

• TRANSPORTATION

• LEASE ENGINE

• DOWN TIME OF AC

Intelligently Defining Aviation

10

VOLUME VARIANCE MANAGEMENT

EFFECTIVENESS

Reduce number of removals • Maintenance Planning • Reliability • On wing troubleshooting

Operator specific factors significant • Operation Type Short/Long Haul • Fleet Size • Lease structure • Engineering

COST VARIANCE MANAGEMENT

EFFICIENCY

Reduce shop visit cost • Supplier Selection • Contract Type / Execution • Workscope Optimization • Material Selection • Logistics

Market conditions significant

SHOP VISIT COST MANAGEMENT STRATEGIES

SUPPORT EACH ACTIVITY BY ESTABLISHING KPIS

MANAGE BY FACTS

Intelligently Defining Aviation

11

SHOP VISIT COST COMPONENTS

A LOOK AT COST BY MODULE

* ROM estimate for typical workscope on mature engine * Excluding LRUs and LLPs

Intelligently Defining Aviation

12

MAJOR SHOP VISIT COST COMPONENTS

MAJOR COST COMPONENTS OF AN ENGINE SHOP VISIT

MATERIAL NEW USED CONSUMABLE

REPAIRS

LABOR

Intelligently Defining Aviation

13

Surplus material utilization has a significant impact on total shop visit cost From 10%-20%

IMPACT OF MATERIAL SELECTION ON COST OF SHOP VISIT

MATERIAL SELECTION IMPACT

Intelligently Defining Aviation

14

MAXIMIZE SURPLUS USAGE

SUPPLIER SELECTION

IN TUNE WITH MARKET CONDITIONS SURPLUS MINDSET / PHILOSOPHY

- CUSTOMER ORIENTED - RESPONSIVE - TEARDOWN CAPABILITIES - QUALITY SYSTEM - NETWORK

SHOP VISIT COST REDUCTION STRATEGIES

Engine Services

15

Aircraft

Parked

Aircraft

Parted-out

Airframe

Parts Sold

Engine

Part out Engine Parts Sold

Engine

Leased

Engine

Leased Again

Engine

Part out

Engine Parts Sold

Engine

Sold

Aircraft

In Operation

Value Measurement

Benchmarks

Airframe

Parts Repaired-CRG

Engine Parts Repaired -

The GA Telesis Strategy allows for the Maximum Flexibility as is it Relates to

Asset Disposition and Value Creation/ Protection

Engine

Leased

Engine

Leased Again

Engine

Sold

GATES

Disassembles

GATES

REPAIRS

GATES

REPAIRS

GATES

CONSUMPTION

The Engine MRO Acquisition, GATES, enables GA Telesis to further

penetrate the Airline Value Chain

There is Significant Demand for Used-Serviceable Parts

January 2013

Engine Components Represent the Largest Part of the Market

January 2013

Source: AeroStrategy

Most Used-Serviceable Material Comes from Part-Outs

January 2013

Scrap Parts Leads to the Primary Source of Demand

January 2013

Company Overview

20

2002

2007

2009

2011

2012

GA Telesis (GAT) founded

Bank of America Merril Lynch

makes strategic investment in GAT

Acquires Curtiss Wright Accessory

Services in Miami, FL

Acquires additional composite MRO

facility

Century Tokyo Leasing (CTL) makes strategic

investment in GAT

GAT & Air China form landmark JV

GAT purchases Finnair

Engine Services

Global Network & Expansions

21

The only independent aftermarket provider to have full scale part-out and distribution capabilities on three continents

AMERICAS EUROPE ASIA

MRO

Fort Lauderdale & Miami

Beijing

Helsinki

Brazil 2013/14

Middle East 2013/14

Planned Expansions

Distribution Center

Leasing, Asset Mgmt

Parts Sales Office

Bournenouth

Tucson

Our Services

22

Parts Sales & Acquisitions

Supply Chain Management

Fleet Solutions

Leasing MRO Govt & Defense

Financial Services

Comprehensive Support Capabilities

Intelligently Defining Aviation

Managing $500m+ in

assets

Over 450 engines

disassembled

Over 175 airframes

disassembled

One-stop-shop for all material

needs

Intelligently Defining Aviation

Your job is in the sky Our job is to keep you there

24