Joseph Saporito, CEO, Australian Aerospace Pty Ltd

Joseph Saporito was appointed Chief Executive Officer of Australian Aerospace, based at Bankstown Airport in Sydney, in 2002. After graduating from the engineering graduate school of Arts et Metiers in Paris, he joined Aerospatiale in France in 1983 as a composite materials engineer and in 1990 moved to Eurocopter. There he held several executive positions in production and with the NH90 program, Head of Operations at the company's Structure Industrial Competence Centre, and Director of the Blades Industrial Competence Centre in Paris In 2002, Mr. Saporito was appointed to his present position. He spoke to ADM's Senior Correspondent, Julian Kerr, in early January.
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Profile - Joseph Saporito
2002 - Chief Executive Officer, Australian Aerospace
1999 - La Courneuve Plant Manager, Eurocopter, La Courneuve
1997 - Head of Operations Department, Controller of the Structure Industrial Competence Centre, Eurocopter
1992 - NH90 and MI 38 Industrial Manager, Eurocopter
1987 - Production Research Department Manager, Aerospatiale
1984 - Head of Composite Materials Sector, Aerospatiale
1983 - Engineer, Aerospatiale

ADM: Australian Aerospace was formed in January 2003 through a merger with Eurocopter International Pacific Ltd. How would you describe the Company's development over the past three years?

Saporito: The evolution of the company has been quick and challenging. Challenging because we had to maintain the existing core business of selling and maintaining civilian helicopters - there are more than 320 Eurocopter helicopters flying in Australia, New Zealand and the Pacific Islands - and in parallel we had to merge with the military wing of Hawker Pacific and continue the maintenance of the RAAF's Caribou and AP-3C fleet. Furthermore, we established two new business units (for Air 87 and for Air 9000 Phase 2) and we set up a new assembly line for the Tiger Armed Reconnaissance Helicopter, which will be used in the future for assembly of the MRH90. We have also launched the assembly line in Australia of the single engine EC120 helicopter. Other challenges have been to transfer technology, create new jobs, and ensure proper training. About 50 staff connected with Air 87 have undertaken specialised training in France and some technical experts from Europe have conducted training in Australia. All that in three years. So we've been busy.

ADM: To what extent is Australian Aerospace a shop window for Eurocopter and its parent company EADS, and to what extent is it a stand-alone Australian-based operation?

Saporito: Australian Aerospace is a fully integrated Australian company. Although we're backed by our parent companies - Eurocopter and EADS - with technical and financial assistance, we're considered by both to be the real local operational and industrial footprint in Australia. EADS and Eurocopter have a long-term strategy of investing in Australia. Australian Aerospace represents the base for such investment in areas such as training, tooling and manufacturing. We're also the main focal point for all cooperation with Australian industry including assembly and global supply chain. We transfer a lot of technology.

ADM: What's the split in revenues between the civil and military businesses of Australian Aerospace?

Saporito: Australia Aerospace revenues in 2005 increased by A$75 million from the previous year to $445 million, of which $53 million came from civil. This figure fluctuates slightly with market conditions but it has been more or less constant over the past five years. Military fixed wing maintenance accounted for $39 million and Air 87 for about $353 million. We're aiming for revenues of $580 million in 2006, of which A$220 million will come from the contract for the 12 MRH90s under Air 9000 Phase 2. When you consider turnover in 2001 was $50-60 million, you can see the growth in military business. In 2001, the company's business was entirely civil; today military represents more than 80% of the company's turnover.

ADM: What is the company's primary focus in 2006?

Saporito: Our motto is to deliver on time and on budget to all our customers, civil and military. Air 87 is still a tight programme but we continue to deliver aircraft and finalise the training programme. We will deliver on Air 9000 Phase 2 and we want to convince the government that the best option for Air 9000 Phase 4 is
to continue with the MRH90

ADM: Could we go into some more detail on Air 9000 Phase 4? Where is the process at the moment?

Saporito: Capability Development is working with DMO and Army to determine all the possible options, and one of these is to replace the Blackhawk with the MRH90. We expect a decision before the end of June, with the contract being finalised in the following six months.

ADM: Is your approach to Phase 4 any different to that used for Phase 2?

Saporito: Not really. We made an attractive offer for Phase 2 plus Phase 4 and our offer for 40 MRH90s (including the 12 being acquired under Phase 2) is still valid. Basically, the price of the helicopters and maintenance remains the same. Phase 2 and 4 will generate A$1.1 billion of Australian industry involvement. We have also offered to establish in Australia a complete assembly line for all the MRH90s apart from the four initial aircraft being assembled in Europe to train Australian staff. We've also offered to establish in Australia a centre of excellence for training and for sustainment of the helicopters. The complete package also includes the creation of 400 new long-term jobs in Australia, and the direct investment locally of an additional A$60 million.

ADM: Are you happy with the tendering process?

Saporito: Of course we would have preferred the selection of Phases 2 and 4 to come at the same time but we understand the budgetary constraints. The cooperation with the government and DMO has been very good.

ADM: Australian Aerospace has referred to the close cooperation between it and the Air 87 Project Office. In practical terms, how has this been achieved?

Saporito: A lot of team spirit. It's a complex program, and this means you need to be flexible and adapt to real life. But you can't have this flexibility unless there's competence and transparency. Both sides have been able to soften the administrative process and find more pragmatic solutions. Instead of exchanging a lot of formal letters, we organised specific workshops, we organised think tanks, we organised management meetings. Our goal was always to find a solution that benefited the program.

ADM: You've referred to the close cooperation on the Air 87 program with SMEs. What are some practical examples?

Saporito: The domestic development and production of ground training devices for the Tiger has been a great success and there is a real export potential for these. The underwater escape trainer was designed and manufactured in New South Wales by Total Aerospace Solutions. It is operated by a Darwin SME, Accrete Pty Ltd., which specialises in training and now wants to use the same principle for other platforms.

ADM: The Air 87 contract included development and implementation of the training program, configuration management, engineering, document control, and through-life logistic and maintenance support. How does the MRH90 Phase 2 contract differ from this?

Saporito: It's very similar, but it doesn't include a full flight mission simulator. The Commonwealth wants to keep its options open and such a simulator is considered in Phase 4 acquisition budget.

ADM: Where do negotiations stand with New Zealand on its purchase of NH90s?

Saporito: The contract is not yet finalised, but we expect a conclusion by the end of March. The final configuration and number of helicopters to be acquired is not known, but it's likely to be between eight and 10.

ADM: What practical benefits as the supplier do you envisage from joint acquisition and operation of the MRH90/NH90 by the ADF and NZDF?

Saporito: It's logical that operational maintenance of the NZ platforms be carried out in New Zealand. But we need to convince the New Zealand government that this is a real opportunity to establish a regional centre of excellence in Australia, using all the investment made here, for the deep maintenance of military helicopters. What we're developing in Australia for training could be used by New Zealand as well, but again, this has yet to be decided.

ADM: Where do you anticipate MRH90 training will take place?

Saporito: Oakey is an option and we have a team of 20 people there for Tiger training and maintenance. But for MRH90, at the moment we plan to train people in Townsville

ADM: Are you able to utilise for rotary the skills of engineers working on fixed wing maintenance, and vice versa?

Saporito: Within Australian Aerospace, rotary and fixed wing are different divisions in terms of management, but we have created a production centre which is a supplier for the different programs. This enables us to shift engineers around as needed. This is not always valid for some specialised engineers, but a pool of staff has been developed who can move from one platform to another. When we created the Air 87 task force, we transferred some people to the Tiger assembly line from Caribou and AP-3C maintenance activities after giving them the appropriate training. And, of course, people on the Air 87 task force have the necessary basic skills to work on the MRH90.

ADM: In terms of assembly, four seems to be the magic number. Four of the 22 Tigers on order were assembled in France, and four of the 12 MRH90s are to be assembled in Europe. Why is that?

Saporito: Mainly for two reasons. First, this is the minimum number of aircraft we need to train people. It also allows us to have a good scheduling of the training. We train different teams at different stages of the assembly line and we transfer them progressively in Australia once they are fully qualified. The second reason is to meet the delivery dates. If we carried out all assembly in Australia, we wouldn't be able to deliver the first four aircraft on time.

ADM: How many staff do you employ? Have you had any difficulties in resourcing the appropriate skills given the company's rapid growth??

Saporito: Australian Aerospace currently employs 465 people and the forecast is to increase to about 600 by 2008, depending of course on whether we win Air 9000 Phase 4. We had no problems with suitable recruitment in the beginning, but there have been difficulties in the past two years. This is why we've worked very closely with the defence force and DMO to understand exactly what kind of skills we're likely to need in the future. Our strategy is to employ people and transfer new skills during the acquisition phase and to prepare staff for the sustainment phase. It's a long-term strategy. We also work very closely with training schools. A good example is Aviation Australia in Brisbane. Another example is in Darwin, where we're about to establish a task force of around 20 people for the operational maintenance of the Tigers and where we're working with a local training school to develop the necessary skills.

ADM: Australian Aerospace had a world first in successfully implementing Project Kestrel to extend the life of the RNZAF's P-3Ks to 2020. What prospects are there for carrying out similar life extension programmes for other P-3 operators?

Saporito: Yes, there are prospects. The Canadian Forces have elected to extend the Life of Type of the CP140 Aurora aircraft (P-3 derivative) by a Kestrel- type solution. As a result, Lockheed Martin will be opening a wing production line and availability of new wings will provide interest throughout the P-3 community for a Kestrel solution. Australian Aerospace is well placed to support countries who want to embrace this type of solution. I would say that any P-3 fleet upgrade in the world could be a prospect because we have worked very closely with Lockheed Martin on the New Zealand programme and we are prepared to do so in the future. This capability is also being marketed internationally through EADS.

ADM: What activities will Australian Aerospace be participating in with the five A330-200 Multi-Role Tanker Transports (MRTT) on order for the RAAF?

Saporito: Australian Aerospace is part of the industrial team for the MRTT programme. We're involved in development of part of the mission system. We currently have some engineers in Spain working with Airbus Military to develop the mission system and being trained to have the necessary skills to maintain it.

ADM: To conclude, how do you envisage Australian Aerospace in 2010?

Saporito: The long-term vision of the company is to become the centre of excellence for civil and military helicopters and military mission aircraft in the South Pacific region. We want to consolidate our military business in Australia; this is why we focus on being professional, transparent with our customer and delivering on time and on budget. In terms of turnover, this could grow in the next five years to about A$650 million, but this of course will depend on the business we can obtain, mainly from Air 9000.