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Despite Citira fears, aircraft maintenance firm Lufthansa Technik invests in $40-million new hangar

Lorenz S. Marasigan | Business Mirror | November 28, 2019


Breaking ground for the $40-million Lufthansa Technik hangar on Wednesday (November 27, 2019) are, STAM Engineering Executive Director Keh Ching Ann (from left); MacroAsia Corp. President and COO Joseph Chua, House Majority Leader Martin Romualdez, Trade Secretary Ramon Lopez, Sen. Cynthia Villar, Lufthansa Technik Philippines President and CEO Elmar Lutter, Bukidnon Rep. Manuel Zubiri, Finance Undersecretary Karl Chua and Grandspan Development Corp. President Alfred Tiu.

Aircraft maintenance, repair and overhaul provider Lufthansa Technik Philippines (LTP) broke ground on Wednesday for its new $40-million hangar in Manila, even as it is remains skeptical of the implications of a tax bill that could potentially cause it to pack its bags and move elsewhere in Southeast Asia.

Elmar Lutter, the president of the company, said his group is still confident of prospects in the Philippine market given that it is a demographic sweet spot filled with local talent, reflective of a fresh $40-million investment for a new hangar at the MacroAsia Special Economic Zone, Villamor Airbase in Pasay.

“The Philippines is perfectly geared up to be a provider for aircraft maintenance in the future,” he said in a press briefing on Wednesday. “The company strongly believes in the ability of the Philippines to be a hub for aviation services in the region, and proof of this is our expansion and continued commitment to the country.”

The new hangar will increase the company’s capacity by 20 percent, and could potentially draw 10 percent more revenues from maintenance orders from various airlines around the world.

Citira jitters

However, Lutter expressed concerns on the Corporate Income Tax and Incentives Rationalization Act (Citira), as its industry is “not properly represented” in the proposed bill’s current form.

“We have reached out to the government on all channels we could, and we have officially handed in our position—flagged our concerns to the tax bills, and that’s part of the democratic process,” he said.

Lutter added that his group, contrary to its earlier statement, will wait first for the government to finish crafting the bill, and would first dismiss prospects of relocating to another Asian country, should the legislation be passed against it.

“Our hope is that our concerns are properly integrated into the final consideration,” he said. “We have a lot of trust that the Philippines, and we hope the elected lawmakers see the benefits of this in the industry.”

The group’s main concern focuses largely on the treatment of aircraft parts that it imports in the Philippines.

“We are not planning to relocate and we have trust in the process,” Lutter added.

For now, the group will focus on developing the new hangar that it is building, which will create 275 jobs by the end of 2020. LTP is currently employing 3,300 Filipinos across key cities nationwide, including Clark, Cebu, Davao, Kalibo and Puerto Princesa.

Image Credits: Nonie Reyes