BASED IN COPENHAGEN but with warehouses scattered around the globe, Satair is one of the leading distributors of aircraft production parts and spares. In the year to June 30, 2007, it boasted revenues of almost $360 million, up 37% from the previous year. Of this growth, 18% was organic with the remainder attributable to acquisitions that made a sizeable contribution. For the current FY it is forecasting revenue in the range of $400-$410 million, up 13%, reflecting a period of consolidation following considerable acquisition activity in the last couple of years.

Profit before tax for FY07 was $16.8 million, up 40% from $12 million in the previous year, driven primarily by revenue growth. The outlook is rosy, but instead of sitting back on its laurels, Satair this summer put in place an ambitious plan aimed at taking the company to "an entirely new level," according to the annual report. New systems and services, innovative solutions and closer customer relations are key to this new strategy.

KEEPING TRACK OF THE PIECES

Satair basically serves two main markets: Aftermarket and OEMs. Customers in the aftermarket sector include aircraft operators and maintenance facilities and this accounts for almost 70% of the business. In FY07, the Aftermarket Division posted revenues of $214.2 million, up 43% over the previous year. Aircraft manufacturers account for the rest and revenues from the OEM Division totaled $117.2 million, up 26%. "We are, if you like, the glue between the manufacturers of piece parts and equipment and the users," COO Morten Olsen tells Airline Procurement. He points out that a typical passenger aircraft contains up to 3 million different parts, while spare parts for routine maintenance are produced by more than 1,000 different manufacturers. Even more are involved in the production of parts.

"The management of spare parts purchasing is very complex because of the large quantity of products, the large number of suppliers and varying delivery times," explains Olsen. "Parts manufacturers seldom have enough resources to maintain the necessary contact with their many customers," so they often find it difficult to meet customers' growing demands for logistics, documentation and e-commerce competence. At the same time, airlines and aircraft manufacturers want to limit the number of suppliers they deal with.

"So in addition to distributing physical products, Satair also offers in-depth knowledge about products and associated customer support, warehouses in many locations around the world and advanced IT solutions," he adds. "Customers benefit from prompt order fulfillment, technical support, efficient e-business solutions and customized solutions that make it possible for them to reduce transaction costs."

BUILDING FROM HISTORY

Satair was founded in 1957 as an offspring of the SAS technical sales department by a group of people who "knew how to buy cheap and sell onward at a profit," Olsen says. Originally, all its parts stock was made up of excess inventory purchased from airlinesbecause they either were switching to a new fleet or going out of businessand resold to other aircraft operators.

In the 1980s the company moved over to new parts distribution and abandoned the used parts sector of the business entirely. Today, the 50-year-old firm handles predominantly Airbus and Boeing parts, but "we also have a huge number of items going on regional jets and turboprops, so we really cover the whole spectrum," Olsen says.

Geographically, Europe remains the predominant market for Satair but Asia/Pacific and the Americas also are crucial. "The US is still the largest aviation market in the world and we remain very focused on that region. There is still potential for growth there," says Steen Karsbo, VP-marketing and business development.

In late 2005, the company signed an agreement with US-based Pall Corp. to acquire the latter's distribution activities for Pall products in the commercial aftermarket in North and South America, further expanding its market penetration in the region. The following year it took similar steps in the Asia/Pacific, acquiring TPA Pte. Ltd. in Singapore. These two recent acquisitions, it believes, make Satair the largest independent distributor of aircraft parts in the world.

ENJOYING THE LIMELIGHT

The company now has 14 offices worldwide, with approximately 500 staff serving 2,500 customers in more than 100 countries. The Aftermarket Division has offices in Atlanta, Singapore, Beijing, Petaling Jaya (Malaysia), Tokyo, Brisbane and Dubai. The OEM Division has offices in the UK, France and the US (Florida). In addition to its headquarters warehouse in Copenhagen, Satair has nine warehouses around the globe in London, Paris, Dubai, Atlanta, Wichita, Ft. Lauderdale, Melbourne, Singapore and Beijing.

At any given time, it holds about $100 million worth of stock and distributes more than 50,000 different aircraft parts, which are produced by more than 840 suppliers. The parts range from filters and lamps for aircraft maintenance to rivets and bolts used in aircraft production. It does not supply entire engines but does handle significant engine content. "There is really very little that we do not supply," says Olsen. At present, Satair handles about 100,000 transactions a year. It also has two OEM manufacturing facilities, one in the UK and one in France, both acquired as part of an acquisition or merger.

KEEPING ITS EDGE

The company has offered a worldwide 24/7 AOG service for more than 20 years, staffed on a rotational scheme by its own employees. The service has a manager on duty at all times who can access in-house systems to check availability of parts in all Satair locations and has the authority to reprioritize customer orders to meet an AOG requirementpicking, packing and shipping parts as necessary. During any 12-month period the firm ships approximately 100 AOGs outside normal business hours and receives more than 1,500 inquiries from customers.

"We invest a lot to stay on top of technological developments," says Karsbo. Satair currently is spending $5 million on a new enterprise resource planning system that will be rolled out across both Aftermarket and OEM divisions in 2008. The ERP platform is a central element of the new strategy plan. "The new system will make us more efficient and enhance our relationships with both our customers and our suppliers," he predicts. "It will be a new vehicle for us to support the market."

Value-added services already offered as an integrated part of the existing ERP transaction platform include Satair Direct, an Internet-based e-commerce solution with online secure access to order placement and order tracking. The technology gives registered customers real-time access 24/7 to internally available information and enables them to get an online quotation, place an order, search product availability, track an order irrespective of how it was placed (SPEC2000, Satair Direct or phone/fax), print quotations and orders, obtain shipping information, etc.

In addition, the new SPEC2000 XML standard makes it possible to establish real-time communication between Airbus's and Satair's worldwide ERP systems, giving customers access to Satair Direct through the Airbus e-commerce solution.

Satair also has implemented an Integrated Purchasing Program aimed at addressing the need for extended product support for parts from medium-sized and small manufacturers of low-usage spare parts. In essence, IPP functions as an umbrella under which the company manages an increasing portfolio of small and medium-sized suppliers. By integrating demand from multiple operators, IPP is able to improve planning accuracy and provide improved product availability compared to what individual manufacturers and operators might be able to achieve on their own. The number of suppliers covered by IPP currently stands at about 230.

For manufacturers, IPP's continuous demand forecasting for products in the entire portfolio helps lower operational costs by reducing the number of critical and expedited orders. It also gives them 24/7 AOG coverage at no extra cost along with access to a full e-commerce and SPEC2000-enabled product support system plus opportunities to streamline production flows and increase ontime performance as a result of improved order forecasting.

As far as quality is concerned, Satair has its own certified quality assurance system that can provide third-party certifications according to AS9120:2002/EN9120:2005, ISO 9001:2000, FAA AC00-56A and ASA-100 right up to aviation authority approvals according to EASA Part 145, FAA Part 145 and various local authorities. "We hold an extensive archive of certificates and all are scanned and electronically stored," says Karsbo. "We work closely with our suppliers so we know that quality is an issue with them. It is a crucial element in controlling your supply base. Quality control in this industry is a given, but if you don't do it and do it well, you will soon be out of business."

SMOOTH SAILS AHEAD

For the future, Satair is confident of continued growth in the industry. Despite the inexorable increases in oil prices, any negative effect on the air travel boom is simply failing to materialize so Olsen believes the future is optimistic. "Globalization is a positive trend for us, because MROs are becoming more and more global, which makes them larger and large customers," he says. "This presents very good opportunities for us because they always need good supply chain partners."

In geographic terms, Satair has its eyes fixed firmly on the so-called BRIC countries (Brazil, Russia, India and China) where economies are booming and there is significant opportunity for growth. "We already operate in all those countries, but they are huge growth markets and we will expand our presence there," Olsen projects. "China, for example, is forecast to take delivery of a new aircraft every day for years to come. We are also expanding our presence in the Middle East, which has been a big market for us for many years but where airline fleets are now expanding rapidly."

Although no further acquisitions are currently in the pipeline and the company is ready for a period of consolidation, he stresses: "We are always on the lookout for new possibilities and open to new opportunities so we always keep a close eye on market developments. I won't say there are going to be no acquisitions in the foreseeable future, but let's just say that at present there are none planned."