European Commercial Outlook

European Commercial Outlook2022 Fleet & MRO Forecast

October 2021

1

Brian R. Kough, Senior Director, Forecasts & Aerospace Insights

Intelligence & Data Services | Aviation Week Network Washington, D.C.

Information Classification: General

Economic Impact of COVID-19

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

Asia Pacific Europe Latin America Middle East United States

2

Most severe global economic contraction since the second world war with all regions affected.

Do

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ust

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ba

l Fin

an

cia

l Cri

sis

CO

VID

-19

Source: IMF, Oxford Economics

FORECAST

GDP Change 2020 2021

Asia Pacific -1.0% 6.9%

Europe -5.2% 4.5%

Latin America -7.3% 5.2%

Middle East -2.9% 3.7%

United States -3.5% 6.1%

COVID-19 pandemic has caused GDP to contract in all regions but Asia and North America have outperformed other regions.

Global GDP fell by 1.5% in 2009 due to the 2008 financial crisis. In 2020, it is expected to fall by 5.1% due to COVID-19.

Most severe global economic contraction since WWII with all regions affected, strong recovery expected.


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Scheduled & Historic Available Seat Kilometres – By Region

Analysis: Airport Strategy & Marketing (ASM) Consulting, Aviation Week Network

RegionQ4

2021 vs. 2020 % Change

YearJan-Dec

2021 vs. 2020 % Change

Europe 116% 20%

Asia-Pacific 49% -14%

U.S. & Canada 77% 32%

China 14% 19%

LATAM & Caribbean 79% 37%

Middle East 84% 12%

Africa 75% 29%

Europe

US & Canada

Asia-Pacific

China

LATAM & Caribbean

Middle East

Africa

Scheduled airline capacity through December 2021 (as of 7 October 2021)

3


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Asia-Pacific China Europe Latin America Middle East North America

Ind

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9)

4

Wuhan lockdown

Recovery strengthened in Europe, Latin America, Middle East and North

America. China saw utilization decline dramatically in February & August before

climbing back.

Utilization Change – RegionIndexed flight hour utilization for commercial aircraft fleets by operator region vs. July 2019

Source: AWIN Flight Tracking Data, Copyright 2021

EU / US lockdown


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Hours Cycles5

Aircraft Utilization – Major European AirlinesUtilization rates in hours and cycles for major European airlines, including LCCs – January to August 2020

Wuhan lockdown

Europe / US lockdown

Hours fell by 81% and cycles 84% in the month following the Europe / US lockdown.

Recovery in hours and cycles underway since

March 2021 has gathered pace in August.

As of August, flight utilization stands at

around 30% below pre-pandemic levels.

Source: AWIN Flight Tracking Data, Copyright 2020


Aviation Week Network Forecast

Global annual deliveries historical & forecasted

Forecast: New Deliveries Commercial Aviation

Source: 2022 Commercial Aviation Fleet & MRO Forecast, Aviation Week Network, Copyright 2021.

• 20,000+ worldwide deliveries over 10-year 2022-31 period.

• Narrowbodies lead recovery efforts, 77% share of deliveries – Airbus A320 outpaces Boeing 737.

• MAX delivery status since MCAS grounding March 2019: 143 delivered to date out of 447 built, 304 awaiting final delivery.

• Wildcards: A220-500, Boeing 5X, Embraer CPX, 777X & A350 freighters.

1,821

812

1,809

-

500

1,000

1,500

2,000

2,500

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031

6

Highlights

Narrowbody77%

Widebody14%

Regional Jet5%

Turboprop4%

2022-31 Share of Deliveries

737 MAX Re-certified



-803

-688

-1,180

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

-1,400

-1,200

-1,000

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-200

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% ActiveFleetRetirements

-1,722

-5,000

-4,000

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-1,000

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NorthAmerica

WesternEurope

AsiaPacific

EasternEurope Africa

LatinAmerica

MiddleEast China India

Regional Retirements 2022-31

Forecast: Aircraft Retirements

7

Annual retirements historical & forecasted


665 average/year 2.2% of the fleet

2015-21

• Retirement projections top out at 1,180 in year 2029.

• Contrary to impressions, 2019 & 2020 were NOT record years.

• Historic high percentage of fleet rates dominate the 2H decade.

• Used spare parts/green time engines may flood markets for popular legacy types depressing pricing.

~10,700 retirements over 2022-

2031

Up ~500 previous period

Boeing 767 and Others Await Recycling

1,025 average/year 2.8% of the FleetForecast 2022-31

Credit: Nigel Howarth, Aviation Week

Highlights


Aircraft forecast returns from long-term storage post-pandemic

Aircraft Returning from Storage

8Source: 2022 Commercial Aviation Fleet & MRO Forecast, Fleet Discovery, Aviation Week Network, Copyright 2021.

Long range widebody fleet will see the slowest return to service with aircraft gradually leaving storage

over the next five years.

Highlights

• 12k aircraft stored in May 2020, 6.7k in July 2021.

• Almost two thirds of the aircraft returning from storage in the forecast period will return by the end of 2022.

• International travel associated with widebody aircraft will be the slowest to return to active service.

• Through the first three years of the forecast, a total of over 3,100 aircraft are expected to return from storage as passenger demand increases.

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Single Aisle Twin Aisle Regional Turbofan Turboprop

Historical Commercial Aircraft In Storage

Jan 2020 3,096

Feb 2020 3,631

Mar 2020 10,062

Apr 2020 11,749

May 2020 12,057

Jun 2020 11,152

Jul 2020 9,641

Aug 2020 9,302

Sep 2020 9,065

Oct 2020 8,907

Nov 2020 8,773

Dec 2020 8,501

Jan 2021 8,656

Feb 2021 8,727

Mar 2021 8,389

Apr 2021 8,014

May 2021 7,561

Jun 2021 6,923

Jul 2021 6,404

Aug 2021 6,069


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Aircraft In Service Aircraft Parked Aircraft Parked/Reserve

Historic In-Service Active AircraftCommercial jets and turboprop aircraft in-service, by month (includes parked, excludes stored)

Air

cra

ft

Wuhan lockdown

Source: Fleet Discovery, Aviation Week Network, Copyright 2021

Long range widebody fleet will see the slowest return to service with some aircraft

gradually leaving storage over the next 1-3 years.

10%, (-3k) fewer active aircraft than December 2019.

Commercial aircraft in-service seeing a gradual but steady recovery since June 2020.

15% parked or parked/reserve of the current, active in-service fleet by flight

activity observed vs. 26% parked in March 2021.

New York lockdown

Note: In-service totals for months prior to Sep 2021 include parked and parked/reserve aircraft. Excludes stored aircraft

Peak ISF

Lowest ISF

Credit: Brian Kough

Credit: Mike Hopwood

26,990ISF

Credit: Nigel Howarth



29,581

32,58633,465

0

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10,000

15,000

20,000

25,000

30,000

35,000

40,000

45,000

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031

Aircraft

Forecast3.1% CAGR 2022-31

2.9% CAGR 2015-19

737 MAX Re-certified

Annual count of active commercial aircraft, historical & forecasted

Forecast: World Trends In-Service Aircraft Fleet

10Source: 2022 Commercial Aviation Fleet & MRO Forecast, Aviation Week Network, Copyright 2021.

• 3.1% future CAGR expected after 2.9% historical fleet growth.

• Pandemic influences: return from stores (3-4k), P2F freighters (1K). In May 2020, 12k aircraft were in storage!

• In-service fleet in mid-2021 recovers to more than 29,000 aircraft in line with 2015 levels.

• Narrowbodies are key growth driver over decade: MAX recertified + A320s take delivery lead.

Highlights

-78%-77%-60%

-39%-39%-36%-30%-24%

3%9%13%23%

44%67%84%

128%312%

A380

757

CRJ

EMB135/140/145

747

DHC-8

767

DHC-6

A330/340

ATR 42/72

ERJ Family

777

737

A320

787

A350

A220

ISF % Change for Select Aircraft


CFM Interntional

57%Pratt &

Whitney

22%

General

Elertric

10%

Rolls-Royce

6%

Pratt & Whitney Canada

4%

Powerjet

1%Perm

0.2%

Forecast: New Build Engine Deliveries: 2022-31


23,140

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CFM’s LEAP engine alone is projected at over 23,000

engine deliveries.

CFM International engines account for 57% of all engine deliveries (not

including spares…)

Aircraft Family Engine Model

737 Max LEAP-1B

A320neoLEAP-1A

PW1100G-JM

MC21PD-14

PW1400G

A220 PW1500G

ERJ175-E2 PW1700G

ERJ190/195-E2 PW1900G

C919 LEAP-1C

ARJ21 CF34-10A

SUPERJET SAM146

ERJ170/175/190/195 CF34-8E

A350 Trent XWB

787GEnx-1B

Trent 1000

A330neo Trent 7000

Credit: Guy Norris, Aviation Week


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Airframe Heavy Modifications Line Maintenance Components Engine Maintenance

MRO Demand - AnalysisGlobal MRO aftermarket and the impacts from the pandemic


2022-313.2% - Overall MRO Demand CAGR3.7% - Engine MRO Demand CAGR

• MRO grows at 3.2% CAGR 2022-31, worth $1.013 trillion, without inflation.

• Engine MRO demand is $474 billion over decade and grows at 3.7% CAGR. Green time/USM influences…

• Components MRO grows fastest at 4.2% CAGR.

• Airframe work expected to be cyclic.

• Recovery rates vary by region, role, and by aircraft category (NB, WB, regionals, turboprops, etc.)

Highlights

Engine Maintenance

47%

Components21%

Line Maintenance

20%

Modifications7%

AirframeHeavy

5%

Pre-COVID-19 Forecast


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$ B

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Africa Asia Pacific China

Eastern Europe India Latin America

Middle East North America Western Europe

MRO Demand by Region & Aircraft Category

Source: 2022 Commercial Aviation Fleet & MRO Forecast, Fleet Discovery, Aviation Week Network, Copyright 2021.

Single

Aisle

47%Twin

Aisle

44%

Regional

Turbofan

6%

Turboprop

3%

By Aircraft Category (2022-31)

RegionMRO Demand

2022-31Share

North America $220.5 B 22%

Western Europe $195.5 B 19%

Asia Pacific $184.9 B 18%

China $132.1 B 13%

Others $280.2 B 28%

• North America alone is expected to generate $220.5 billion.

• Fastest growth in China and Asia-Pacific; expected to expand at a 4.3% and 5.7% CAGR respectively.

• Eastern & Western Europe combined generate a total of $252 billion MRO demand.

• Single Aisle MRO will dominate the global fleet despite the higher costs associated with larger twin aisle aircraft.

• A320 family alone is expected to generate $257 billion demand, equivalent to almost 25% of all MRO activity.

Highlights

Credit: Brian Kough, Aviation Week


MRO Demand Shift – Airframe Heavy Maintenance Global

14

‘MRO-Roller’ Coaster?• Grounding and storage of commercial aircraft created deferrals

of thousands of calendar/utilization airframe checks.

• As aircraft return to service needing required checks, they’ll

create sine wave demand cycles – roller coaster…

• ~15,400 checks needed in 2022, falling to around 10,100 by

2024 before increasing again.

• $55 billion is expected to be spent on C & D Checks over decade.

• Demand increasing at a 1.1% CAGR – the slowest growth rate.


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Heavy Airframe Demand

Other ATR Yabora/Embraer Embraer/Yabora Airbus Boeing 8,000

9,000

10,000

11,000

12,000

13,000

14,000

15,000

16,000

2022 2023 2024 2025 2026 2027 2028 2029 2030 2031A

HM

Eve

nts

Heavy Airframe Events

Airbus

Boeing


MRO Demand Shift – By Engine Family Global


Trent 1000 GEnx RB211

• CFM56 accounts for almost a quarter of all demand, ~$113B.

• TRENT family sees rapid growth: TRENT 1000 (787) & TRENTXWB (Airbus

A350) maintenance spend rises from $4.8B to $8.8B for Rolls Royce.

• Demand for V2500 MRO declines before the end of the decade.

• GEnx (787) demand more than doubles over the decade rising from $2.5B in

2022 to over $6.1B by 2032.

• PW1000G & LEAP shop visits ramp up in the latter half decade generating

$4B and $5B in annual demand respectively.

• Decline in demand for CF6-80 (767, A330), GP7000 (A380) maintenance

linked with decline of widebodies & RB211 (B757).

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World MRO Demand by Engine Family

2022 2031

Highlights


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Deliveries Retirements

Europe’s Engines

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Deliveries vs. retirements in Europe 2022-31


• Europe (west + east) projected for 22% of world’s delivery share of firm and expected orders.

• Retirements peak in 2025 at +600/year.

• Deliveries outpace retirements 1.7:1

~8,600 new engines required in next 10-years

~5,140 retirements expected

Europe22%

Asia Pacific

21%

North America

21%

China10%

Middle East9%

Latin America

9%

India7%

Africa2%

World Delivery Share

PW1100G/NEO

Highlights


0

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4,000

6,000

8,000

10,000

12,000

14,000

2022 2023 2024 2025 2026 2027 2028 2029 2030 2031

New Generation Engines Legacy Engines

LEAP

51%

PW1000G

36%

TRENT1000

/7000/XWB

8%

GENX

3%

GE9X

2%

NEW GEN DELIVERIES

Engine Fleet Europe

17

New generation vs. legacy in-service fleet share & deliveries forecast


• New generation engines will exceed legacy types by 2030.

• LEAP family will hold 51% share of new deliveries (A320 + B737).

• Europe’s fleet grows below average at 2.3% CAGR.

• Legacy engine fleet holds +50% share at the end of 2029.

• Fleet ends 2031 at ~18,800 engines.

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Lead by LEAP, new generation engines will account for over

half of the active fleet in Europe by

2030

Highlights


• Retirements of legacy aircraft significantly impacts engine MRO market demand.

• Topping the list: 6,400 CFM56, 1,800 CF34 and 1,700 V2500 powerplants

• Trends through 2021 suggest that both airframe and engine maintenance events avoided by switching aircraft between parked and active fleet as well as green time swaps to delay maintenance events/costs.

• Assuming these aircraft remain in service, this deferred maintenance may delay retirements or accelerate some.

• Potential to apply downward pressure on the cost of spares or shop visits as USM becomes available.

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-1,500

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-500

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2022 2023 2024 2025 2026 2027 2028 2029 2030 2031

Others JT8D TPE331 RB211 TRENT PW4000

PT6A CF6-80 V2500 PW100 CF34 CFM56

Commercial Engines/Parts with Green Time?


Engines worldwide associated with retiring aircraft: available as spares/USM?

Credit: Brian Kough

Highlights


M A R K E T

S U M M A R Y

R E P O R T

19

European Commercial OutlookFleet & MRO Forecast

For more information, contact:

Brian [email protected]

20

Intelligence & Data Services | Aviation Week Network Washington, D.C.

European Commercial Outlook

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