- Let's start with today's reason. Tell us about the cooperation with the Smartavia airline and what is the essence of the agreement?

- The new long-term agreement will improve the efficiency of the airline by reducing the time for maintenance and repair of aircraft. Lufthansa Technik will provide spare parts for Boeing 737NG jets, which supplement Smartavia fleet. Our company will also be responsible for the maintenance and repair of engines installed on these aircraft. Lufthansa Technik gives Smartavia guaranteed access to the exchange fund of the company's units and spare parts.

In fact, this is the 15th amendment to the existing agreement, which means that we have repeatedly corrected and supplemented the terms of this agreement for 10 years of cooperation. But this is an absolutely normal form of work between two partner companies. We naturally adapt to each other, build relationships in such a way that they are as efficient as possible and create maximum benefits for both partners. And, in this case, the contract was extended to the newest fleet of the airline - Boeing 737-700 and 800. The contract has a minimum term of 5 years, but we did not stipulate the maximum term. He can act as much as the partners want.

Traditionally, on the part of Lufthansa Technik, we bring high quality services to cooperation with the airline, and today we are adding to this a whole range of innovative products and services, as well as modern digital collaboration methods that are very, very suitable for the new name of Smartavia. Our goal is not only to achieve maximum efficiency of the airline’s air fleet, so that it can efficiently transport passengers and cargo. We are fully customising the technical support system to achieve our strategic goals by our partner.

- How do you assess the current state of the Smartavia fleet?

-   Regarding the state of the airline's fleet, I can tell you that, including through the delivery of spare parts on time, we together achieve very high reliability and operational safety. So our cooperation is, ultimately, a contribution to the safety of passengers, and to the commercial success of the airline. The key criterion is the airworthiness indicator. And we, by our actions, our services, allow us to maintain this airworthiness at a sufficiently high level so that passenger and freight traffic can be performed, and to do so with a sufficiently high load for the air fleet.

- Tell us how it works. For example, at the airport, for example, Arkhangelsk got an aircraft. How long does it take for your company to deliver this part, or do you have a warehouse in Arkhangelsk, which can quickly implement all this, and the aircraft will fly again?

-   Deliveries of materials of the company are carried out by categories of orders. The most urgent of these is the “airplane on the ground,” which means that the part is needed immediately. In this case, we are obligated to provide the details of the airline within four hours, but to this, of course, the required delivery period is added. In this case, the first available flight is used by which this cargo can be delivered to the destination where this part is needed. As for the warehouse, I think that one should not mix two concepts: warehouse and exchange fund. The exchange fund is a technology of rapid turnover and guaranteeing the supply of spare parts, and which in turn implies the existence of inventories, but not the fixation of these inventories at one or another destination. The warehouse is, to a greater degree, the statistical presence of some material somewhere in one point. We, first of all, rely on technology and to forecast demand and to be able to supply repaired spare parts that are repaired at our enterprises due to the available inventories and other sources, as well for operation, in the shortest possible time. We give a guarantee to the airlines for the delivery of these spare parts on time for the categories of orders that the company places.

- Could you tell in more detail what your support is in the repair of power plants? Where and how will it be implemented?

-   We have signed a letter of intent, which concerns cooperation in relation to the maintenance of CFM56-7B engines. And this support may concern, on the one hand, the performance of repair and overhaul of aircraft engines. On the other hand, the whole complex of works, which allows to support the operation of these engines on the wing. Overhauls, of course, are performed where the corresponding capacities exist. And performing repairs on the wing means doing these jobs by Lufthansa Technik where the aircraft is located. We have created in the Russian Federation a special company Lufthansa Technik Vostok Services. This is our subsidiary, whose staff, was involved in the support of the first airline Nordavia, now Smartavia. This is, to a large extent, the Russian staff, who work in all Lufthansa Technik systems online, both in Russian and in any other.

- Smartavia is not your only client in Russia. What are the successes of Lufthansa Technik in general in the Russian market?

- I think that I can, absolutely not exaggerating, say that the business of Lufthansa Technik is growing, both in the Russian Federation and in the countries of Eastern Europe. 2018 was successful for us. Lufthansa Technik is the largest foreign service provider in the Russian market. We never impose our services or demand a comprehensive contract that will cover everything. We are trying to be very flexible and reasonable about what services we offer and how we market. We clearly see our role in maintaining and harmoniously complementing our own capabilities of the airline and local providers to provide services for the maintenance and repair of aircraft. In this case, probably, the parameter of economic efficiency and rationality for the airline will be key. If a company can efficiently carry out some kind of work for itself, naturally, we support such activities, including through training and technology transfer. For our part, we provide a range of services that require very large investments and huge amounts of work that are necessary in order to ensure the return on these investments.

Last year, various agreements were signed with a number of airlines in Russia. For example, an agreement with the Ural Airlines company for servicing their newest fleet, the Boeing 737MAX. Naturally, the agreement with the company "Aeroflot", and with other airlines, participants in this market. But, probably, concrete milestones are not as important as the general feeling of success and the fact that the market in Russia continues to evolve. I hope we will be able to gain a foothold at a busy height and continue to grow further.

- Do the sanctions interfere with your cooperation with Russian companies?

- The question is not the most pleasant. Naturally, as a business representative, I have no right to interfere in the decisions of state authorities, I have no right to comment on them. Of course, from a business point of view, any restrictions are neither pleasant nor convenient factors of doing business. But for my part, I can assure you that we have always fulfilled our obligations under the signed agreements. Lufthansa Technik has been operating in the Russian market for over 25 years. I hope it also has a very good reliable reputation precisely because we are responsible for our obligations.

- Are Russian airlines serviced only in Germany or do you also have power in Russia?

-   We do not have production facilities in the Russian Federation, although I absolutely do not exclude the possibility of their creation in a relatively short period of time. At various times, we stranded in Russia linear stations that provided linear services for various airlines. If necessary, we send staff today. But Lufthansa Technik has no permanent enterprises in Russia. And this is a normal, harmonious model of cooperation. We proceed from what services are currently provided in the Russian Federation by local companies. And we have no goal to compete in value with Russian companies. We are very competitive and attractive in those issues that relate to production facilities, which require very large investments, very high qualifications and high labor efficiency, which also requires timely and very precisely customised support for performing work on time. Probably, this is really a strong point, on the one hand, for a German company, or a global company like Lufthansa Technik.

- Maybe you thought about creating a joint venture with one of the Russian technical service providers?

- Creating joint ventures, in the classical sense, is a method of cooperation from the past. If you look at what is happening on the market today, the real art is not investment in energy-intensive technologies, but the ability to manage it while making minimal investments. I think, following this principle, we quite successfully carry out our activities. We support and enter into partnership agreements with our own airline maintenance organisations. This number includes the Aeroflot group and Ural Airlines, and now we are talking with Smartavia. We support the creation by them of their own efficient production facilities, we transfer knowledge, know-how, train staff, while having the opportunity to sign ... If you want, for me a joint venture is a contractual partnership. This is not necessarily a joint investment in the gold industry and the joint drilling of some kind of oil vein. This is a partnership agreement that allows you to expand the extent of coverage geographically and economically. And this is what we do and we do very successfully. Thus, we have the opportunity, using a network of partner organisations, to provide services in other countries, in those regions, in those cities where we do not have our own staff.

- It is clear that like any international company that has a name, you are counting on expanding your business. How can you do this? Where are the areas of activity other than those in which you are already entrenched in the market?

- We talked about the classic products and services that Lufthansa Technik offers to its customers. But, of course, there is a huge amount for potential partnerships and development in those areas that are not yet developed or that are only being developed today. In particular, we are actively engaged in the development of innovative solutions that are designed either to reduce the cost of operating the aircraft, or to somehow increase the comfort for passengers. This is a whole and a number of developments that reduce fuel consumption. This and measures that allow to reduce or increase, for example, the carrying capacity of the aircraft. This is a more compact passenger seating system, which sometimes allows you to add up to three rows in a narrow-bodied aircraft. And three rows are already 18 passengers.

This is also the “shark skin” technology, which allows to reduce the disruption of the air flow from the wing and lower the air resistance, which, in turn, allows for more efficient flight operation and lower fuel consumption. Last week we made a demonstration of our engine wash installation, which, due to regular use, not only prolongs the life of the engine, but also reduces fuel consumption. We are talking about 1.5-2% - a figure that is very significant in the economy of the airline. This and all sorts of solutions for the cab, which we develop and promote to the market. And onboard entertainment system passengers. This and additional factors of comfort, for example, the ability to charge various mobile devices on board, wireless Internet access and access to the onboard entertainment system. All this allows the airline to promote its product, make it more attractive. We develop these systems, we offer them, we help to install them or we install them ourselves. We naturally maintain and improve them over a lifetime. This is the first direction.

Another area that is currently becoming very significant in the work of our company is the development of digital technologies. We are talking about developing a platform that allows us to provide digital services for airlines. And, in fact, the range of services that we offer to airlines through this platform is quite wide. A serious block of these services concerns that it is possible, without taking your eyes off the screen, to assess the condition of the entire fleet in the airline’s fleet, determine where and on which aircraft any problems and defects arise, plan the necessary work, analyse the reliability of the aircraft, see what happens to my aircraft now, what preceded it, why it happened. And then make the appropriate decisions on how to deal with this ailment today.

Probably, even more attractive for the airline is the technology of predictive predictive maintenance, by means of which, based on changes in certain parameters that the system, unit or engine gives out, we are able to determine very clearly the moment when the defect occurs. These are the areas in which we will expand our presence in the markets.