£9m aero parts win for DHL

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KPMG has awarded DHL Supply Chain a £9.1m (10.6m euro) contract to track and consolidate almost 25 million aircraft parts and their associated trace documents scattered over 100 locations.

KPMG is the administrator for Aero Inventory, which up until November 2009 offered airlines and MROs such as Qantas, All Nippon Airways, Air Canada and Haeco, a service involving buying, storing, leasing and maintaining an inventory of various consumables and expendables for aircraft components such as airframe structures, engines, wheels, brakes, electronics and interiors.

Aero Inventory purchased stocks of components from customer airlines and as part of a unique service offering in the industry, sold them back to the airline at the point in time when they were needed.

The parts are worth some £257m (300m euros) and  DHL deal gives KPMG the option of managing Aero Inventory out of administration rather than resorting to a fire sale which is likely to net considerably less cash.

DHL is expanding its aerospace hub in Singapore by 55 per cent to 70,000 sq ft for the contract. The plan is to recover and consolidate inventory from places as diverse as El Salvador and China, and develop a proper ongoing sales channel.

This will enable KPMG to maximise the sales value of the inventory as well as give it the option of rebuilding Aero Inventory into a viable business.

Jim Tucker, joint administrator of Aero Inventory and restructuring partner at KPMG, said: “Signing the deal with DHL, one of the best known names in logistics, shows our commitment to re-launching Aero Inventory as a world leader in the sale of consumables and expendables (C&E) to the airline industry.

“Since our appointment as administrators in November 2009, we have been restructuring Aero Inventory to put it on a solid footing for the future. Reconciling the massive inventory spread across the world to the central hub in Singapore is the focus of the restructuring process and will give Aero Inventory’s customers clear visibility of available stock and trace documentation.”

DHL will create gateways in Canada, Hong Kong and Japan to consolidate parts released from Aero Inventory worldwide and then ship them to the Singapore hub.

Singapore was chosen as the location for the hub for better inventory management with key drivers for that decision being warehousing and freight costs, operational and sales strategies and access to major air routes.

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