Delta Repair Center With Aeromexico to Boost Aerospace Hub

Delta Air Lines Inc. (DAL) and Grupo Aeromexico SAB (AEROMEX*) said they will build a maintenance, repair and overhaul center in the central Mexican state of Queretaro, bolstering the region’s growing aerospace industry.

The facility at Queretaro Intercontinental Airport will replace one in Guadalajara and will have the capacity to service as many as seven airplanes at a time, the two carriers said in a statement today. The airlines will jointly invest as much as $50 million in the center, Aeromexico Chief Executive Officer Andres Conesa said in an Aug. 15 interview.

Queretaro, about 130 miles (209 kilometers) northwest of Mexico City, already is home to a Bombardier Inc. (BBD/B) aircraft fuselage plant, a General Electric Co. (GE) turbine engineering center, and factories of French airplane-engine maker Safran SA. (SAF) Eurocopter, the helicopter unit of European Aeronautic, Defence & Space Co. (EAD), is building an aircraft parts plant.

“It’s excellent news for the region,” said Luc Beaudoin, principal of AeroShores Management Consulting, which advises aerospace manufacturers on setting up operations in Mexico and has an office in Queretaro. “It’s increasing the physical mass of aerospace activities.”

For Mexico City-based Aeromexico, Mexico’s largest airline by passengers carried, the repair center represents “a clear recognition of world-class quality and service Mexico offers through its skilled manpower,” Conesa said in the statement.

Ed Bastian, president of Atlanta-based Delta, the world’s second-biggest carrier, said the facility would “usher in lower maintenance costs.”

Delta rose 1.2 percent to $8.65 at the close in New York. Aeromexico fell 0.9 percent to 20.02 pesos in Mexico City.

Aerospace Clusters

While low labor costs have helped draw manufacturers to Queretaro, rising aerospace and automotive investment in central Mexico may set the stage for “labor shortage and inflation,” Beaudoin said in a telephone interview from Laval, Quebec. Mazda Motor Corp. (7261) and Honda Motor Co. (7267) announced plans last year to build factories in the state of Guanajuato, which borders Queretaro.

Mexico also has expanding aerospace clusters in the northern border states of Baja California, Sonora and Chihuahua. The industry is expected to draw increased investment in the coming years, said Carlos Guzman, head of Promexico, the national government’s investment promotion agency.

“Five years ago, we had close to 60 companies in this sector, now we have more than 250,” Guzman said in an Aug. 27 interview. “We have formed a very robust supply chain in Mexico, a very robust ecosystem that makes us more competitive, especially to serve the North American markets.”

To contact the reporter on this story: Brendan Case in Mexico City at bcase4@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net

Bloomberg reserves the right to edit or remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.