Aviation Week’s Lee Ann Shay and Lufthansa Technik’s Johannes Bussmann discuss changes over the past 20 years, emerging trends and the future of MRO before he leaves the company at the end of this month.
Don't miss a single episode. Subscribe to Aviation Week's MRO Podcast in Apple Podcasts, Google Podcasts, Amazon, Audible and Spotify.
Rush Transcript
Lee Ann Shay:
Welcome to Aviation Week's MRO podcast. I'm Lee Ann Shay aviation week's executive editor for MRO and business aviation, and I am delighted to be joined by Johannes Bussmann, chairman of the executive board and CEO of Lufthansa Technik. Thank you for joining me.
Johannes Bussmann:
My pleasure.
Lee Ann Shay:
You'll be leaving Lufthansa Technik at the end of June to become chairman of the board of a major German-based technology company. You joined Lufthansa Technik in 1999 and have witnessed a lot of change in the MRO industry since. So let's talk about some of your observations during your tenure. First of all, have there been anything that really surprised you, whether it be innovation or something else that you've witnessed, what really stands out to you?
Johannes Bussmann:
Actually, two things. When I started here at Lufthansa Technik, we were just four years spun off of Lufthansa as an own division and own company. And some people have, I think, made some really wise decisions in how the setup of the company was chosen. And to see this company evolving from when I started, it was around two billion turnover to 2019, we had around seven billion, so that was a tremendous growth. And that goes along with a lot of mind change of people with a lot of new people coming in with a lot of facilities to be opened and see them growing and customer base which drives the attitude of the company and the people in a completely different perspective than just an internal service provider. And I think that is something to observe that over such a long period of time in different positions, that is something really, if you look back, that's really a big thing and something that I'm very happy that I could have the chance to be part of this.
The other thing is more technical. Well, I'm an engineer by background, so that would not surprise you. I think it's now the third generation of engines at the end of the day that have come under the wings of aircraft compared to the time when I started. And that even in these modern times, engineers always find 15, 20, sometimes even more percent of less fuel burn, less noise while it's not a completely different technology, but just making things more efficient is something that I really admire and how the industry and the people working in this industry are working in this direction and managed to do so. That is something that's really, that's really cool. That always fascinated me to observe that. And then of course also to have these engines here under our belt and the aircraft to work with them.
Lee Ann Shay:
Well, I mean, you're right, there's been a lot of technology changes and all those improvements also make it more sustainable. So there's an environmental impact there too, other than just the bottom line. Is there anything that you're most proud of looking back at your 22 and a half year career?
Johannes Bussmann:
Yeah, I think the... Actually the last five, six years what we did in the area of digitalization, so making use of data for driving processes and getting new ideas and how we work, not only inside the company, also with our customers together. This is something that's a new technology that is coming from the sidelines actually, and how that can impact a very traditional, very long term thinking industry. Like the aviation industry with product cycles of 10, 15, 20 years. That is something that is really cool. It came up during my time, fortunately, so I had the pleasure to start this here and see how people get fascinated about the possibilities there and start working with it. And combining these two things, that's something I'm really proud of. And I think if we are just in the middle of it or in the beginning compared to many other technologies that are very well proven, and this is something I'm very proud of. And hopefully there is a long and good future for this combination to come.
Lee Ann Shay:
Absolutely. And when Lufthansa Technik launched AVIATAR, it was a bold move. Like why is an independent MRO doing this? What's the benefit? Why we should trust them? Fast forward to today where not only Lufthansa Technik has accelerated its digital journey during the pandemic. A lot of the world, a lot of the airlines at MROs have done the same thing. And you saw a big uptake, both in customer trials and contracts during this period, but digitalization is a change for the industry. How is hiring progressing for Lufthansa Technik? And is this mindset, is this business shift requiring a cultural change as well?
Johannes Bussmann:
Yeah, I think it goes along with a couple of things. So of course we need experts that we normally did not hire prior to the availability of these possibilities, but that I think is one of the big benefits of being part of the Lufthansa Group. So we have our own it companies that are working in other areas that we can make use of, and that we also developed in that area. So we have, for a couple of years now, quite a sizeable company that is only doing IT services of industry solutions with more than 2000 experts in that area. So they're not all working for us, but it's an access where you have also possibilities of hiring people because this company has an own brand in this community and they can attract to these talents that you need. And then at the same time having smart programs or data analysts or people that know how to deal with these technologies is one thing.
But at the end of the day, I still need to bring it to our processes in the air aviation industry, in the MRO industry. So how do you teach engineers that did whatever for 30 years, their job in a more or less traditional way and make these people communicate to each other, to the benefit of better efficiency or better cost positions and all that stuff. And I think that is a cultural change, and this is something that you need a critical mass to get it started. And it took us a couple of years to be honest.
But now I think we are in a phase where one tell the other from our engineers from only talking the internal side now, and people get interested in, oh, there is a new cool possibility to find out about this or that technical problem. And I think then you're done if this works from the inside and from people getting interested in talking about each other and advertise it in that way, then there is a process running that changes the culture in the right direction. And it's not the entire company, of course, but these people need to talk to each other. Only the engineers don't do the trick. Only the data analysts also don't do the trick, but the combination of the two, that is something that brings us forward. And that has an impact on how people are thinking here and how they also value availability of data and also of these processes for our normal business.
Lee Ann Shay:
That makes sense. In addition to increased digitalization and MRO, what else do you predict for MRO as far as changes in the next five to 10 years, looking into your crystal ball, where do you think the industry will be in five to 10 years, any other big changes coming?
Johannes Bussmann:
I think for the next five years, we will not see much. The pandemic generated a situation where I think the technology that is in the market that is flying even stays a little bit longer because a lot of airlines accumulated a lot of debt during the pandemic. So there will be kind of delay on getting new technologies in the air and making them sizable in certain areas in a 10 years timeframe. I see it different.
I think you will see more and more of the older technologies disappearing out of the market, or at least getting much smaller in numbers. And that means that the players that are comfortable with the new technologies, with the modern aircraft types, modern materials, they will, I think get more powerful and get also bigger in size and will dominate the market compared to the lot smaller shops that are existing now. I think in 10, maybe even a little bit longer, 15 years, a lot of these very small shops will disappear or will be accumulated in the other players. And this is something that is on the way. And from my perspective, due to the pandemic is take to the right side a little bit longer.
Lee Ann Shay:
Speaking of the future. What's your vision for the future of travel from electrification to hydrogen to electric vertical take off and landing the eVTOL vehicles?
Johannes Bussmann:
Well, I think electrification is something that is per se already for the last 20 years, the biggest change in our industry. When you go through our shops, every part number, everything has some electrical parts next to it, or directly attached to it, and that wasn't the case 20 years ago. So, that is all of our mechanics have also abilities in that area. I think that's something that will continue if there are more possibilities, because I think we very far there already. If you think about really electrical flying and hydrogen, I think the limits of electrical flying are very obvious.
The ratio between weight and distance is what it is. And you need magnitudes get on a different scale there, which I don't believe in as an engineer, but that could lead to a different kind of travel and mobility, maybe on a shorter distance, but replacing mid and long range aircraft, I don't think that's a technology that is, will be successful. That might be different with, with hydrogen or with other combustion processes that are in development.
But I think that's something that will really take time and there's lot of enthusiasm and a lot of money that is in the market. But if you look at the safety that we are requiring, I think I'm realistic that anything in the next 10 years will not show up, that we see masses of people traveling with a different perpetual system or different mobility set up there because the requirements are so high in terms of safety and security and rightly they are so that this will take just longer. It's, that's fine from my perspective, as long as we make progress. And I think the moment the enthusiasm is about making progress there. There are a lot of ambition plans out there from my perspective, they are very ambitious.
So the timeline is more in the forties than in thirties, if you ask me, but that doesn't mean that we do not need to start and do not need to develop there. EVTOLs, I'm a little bit skeptic in terms of regulations. That's not so much in a technology perspective from my observation, it's more a regulatory topic so that this is available in every city. I'm pretty sure there are a couple of cities that will make use of that, but especially in Europe with all the restrictions that are also existing in that regard, I think it's more a question of the regulatory environment than of a technological environment because there we will be quicker than the regulator from my perspective.
Lee Ann Shay:
So as far as MRO and the impact to MRO in the next 10 years, do you see it? It's really not going to be as much of like an infusion of new technology in the vehicles, maybe just getting ready for hydrogen or... What do you think are going to be the big changes?
Johannes Bussmann:
I think that's the topic actually, what we need to deal most with the other two are not that problematic from a technological perspective, but to deal with hydrogen is something that we need to get used to, and that's where we also start right now because that's a learning that takes much longer. But if you look at the real... 10 years, what the part of turnover company, our size will be, I think it will still be minimal, but the amount of experience that we gained over these next 10 years, that will be quite sizeable because we need to know what is coming up there and what also works, what is risky to work with and how we deal with these topics. And that's, I think now the time to start and to build up the expertise and also build up the people that are then comfortable on working with its these technologies.
Lee Ann Shay:
Well, stay tuned. Johannes, thank you so much for joining me today and sharing your observations and good luck in your next role. We're going to miss you.
Johannes Bussmann:
Thank you very much, Lee Ann. Thank you.
Lee Ann Shay:
You're welcome. And listeners, please join us again for another episode of aviation weeks MRO podcast. Make sure you don't miss it by subscribing on apple podcasts or wherever you listen to podcasts. And one last request. If you're listening to us on apple podcasts and want to support this, please leave us a star rating or a review. Thank you so much.
