When airlines need a replacement part for a jetliner, two local companies may compete to make the sale.
Intertrade and MidAmerican Aerospace are players with intertwined histories in the multibillion-dollar aircraft replacement parts industry.
Intertrade, 4700 N. River Blvd. NE, was founded in 1969 by two former Collins Radio employees as Ascott Traders and reincorporated a year later as Intertrade. Don Hanrahan, who also had worked for Collins, joined Intertrade in 1970 and eventually bought the company. Hanrahan’s son, Mark Hanrahan, sold Intertrade to Rockwell Collins Inc. in 1999.
When Mark Hanrahan’s noncompetition agreement expired with Rockwell Collins and Intertrade in 2004, he formed MidAmerican Aerospace, 280 Blairs Ferry Rd. NE.
Intertrade, with 52 employees, operates a distribution center in Memphis, Tenn., and distribution centers with marketing, purchasing and sales operations in London and Singapore.
Intertrade, which is marking its 40th anniversary, also can tap the resources of Rockwell Collins business units and employees, including about 300 account representatives worldwide.
Chris Rauch, Intertrade director, said the company offers recertified aircraft components for sale, exchange or lease. He said the quality of the parts is the most important consideration.
“All parts have to go through the proper repair and inspection process,” Rauch said.
Rauch said the company only uses Federal Aviation Administration or Civil Aviation Administration of China repair stations to do that work.
Company officials also make sure that the part can be traced back to its origin, and information found on where it had been used, he said, because aircraft parts move globally.
“We may buy an aircraft for disassembly in Europe and take some of those parts for lease to a customer in Asia,” he said. “When those parts come off lease, we may refurbish them and sell them to a customer in the United States.”
Rauch said Intertrade buys airplanes for parts, but does not handle engines or internal engine parts. It sells a select number of each airplane’s thousands of parts and destroys the rest.
“We’re focusing on those aircraft like where we see a long-term market,” Rauch said. “We recently bought two Boeing 757s because we see a future market for parts from those aircraft.
“As a stocking distributor, we’re also looking for strategic aircraft parts acquisitions that we can purchase and hold for future customer requirements.”
Intertrade also provides supply chain solutions for customers. With its expertise in asset management, inventory planning and forecasting, it also offers those services.
“Being part of Rockwell Collins opens a lot of doors for us,” Rauch said. “We not only deal in Rockwell Collins parts, but also avionics and communications made by our competitors. That’s why we retained the Intertrade name so we wouldn’t be perceived as a captive company.”
MidAmerican Aerospace, which employs about 30, also sells, exchanges or leases aircraft parts that have been inspected and recertified. The company maintains its headquarters and a distribution center in Cedar Rapids and has a site for distribution and disassembly in Chandler, Ariz.
MidAmerican Aerospace supplies aircraft, turbine engines, auxiliary power units, aircraft parts and avionics to customers in the commercial, regional and military aviation markets.
Hanrahan said MidAmerican Aerospace sharply reduced its payroll in February 2008 when the price of crude oil soared above $100 per barrel.
Hanrahan said the company also reduced salaries or put some employees on commission. He stopped taking a paycheck and the business turned around, earning a profit of $250,000 in each succeeding month.
“We’re going to make about $1 million this year, which is a miracle with what the industry has experienced,” Hanrahan said. “We were buying Boeing 737-300s for somewhere around $2 million to $3 million several years ago, depending on configuration. Today. we’re buying them for $400,000.”
While it will continue to buy and sell aircraft parts, MidAmerican Aerospace wants to move primarily into buying and selling or leasing engines and engine components, Hanrahan said. He said the industry is showing signs of recovery as fuel prices have moderated, but prices are still depressed.“This is a buying business,” Hanrahan said. “If you’re fortunate to buy something at the right price and sell it for more than you paid, you will do all right.”