industry forecast MRO.pdf

8/14/2019 industry forecast MRO.pdf

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2

Asiahasemergedasaheavyweightinaviation

$ $5 $10

STAerospace

Haeco/Taeco/Staeco

Malaysian

AerospaceEng

SIAEngineeringCo.

AFIKLME&M

AARCorp.

IAI/BedekAviation

Group

AveosEgyptAir

Maintenance&Eng

ADAT/SRTechnics

Aviation Week Top 10 Airframe MROs

* Based on score on financial health, liquidity, fuel management,financial health, earnings perform, asset utilization

0 50 100

AirAsia

AirArabia

Ryanair

Holdings

HainanAirlines

Allegiant

TransasiaAirways

VuelingAirlines

Copa

SingaporeAirlines

WestJetAirlines

AllNipponAirways

RegionalExpress

AerLingus

AlaskaAirGroup

SpiritAirlines

Easyjet

QantasAirways

CebuAir

DeutscheLufthansa

GarudaIndonesia

Aviation Week Top 20 Performing Airlines

* Based on total airframe man hours


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3

Theworldsgrowthpowerhouse

Asiaseconomicgrowthtrends

China:Softlanding

in2012,GDPreboundin2013

Japan:Recoveryseeneasingsomewhatin2013,but

GDPgrowthremainshealthy

Korea:propelledbyconstructioninvestments,U.S.free

tradeagreement

ChinadirectinvestmentinAfricancountriespropels

additionaltrafficandflows

Regionwide,tourismgains

WesternaerospaceownershipsareshiftingtoAsia


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4

Keyquestions

WhatisthestateoftheAsianmarketatpresentandwhat

arethefactorspromptingitsimpressivegrowth?

HowwillthenewaircraftordersimpacttheengineMRO

sectorandhowwilldemandchangethrough2021?


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5

Predictionofthefuture:Arollercoasterride

2015 20162017

20182019

20202021 Year10

20,000

25,000

30,000

35,000

Unitsaircraft

Year 10 of each 10-yearforecast horizon

Source: Aviation Week


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Asiarankshighintrafficgrowth

Block Hours +3.8%

2

Block Hours +3.8%

22Departures +2.5%

1

Departures +2.5%

11

ASKs +4.4%

2

ASKs +4.4%

22

Capacity +4.5%

1

Capacity +4.5%

11

* Including China and India, Q3-Q4, 2012 vs. 2011, based on

aircraft domiciled region. Source: OAG Schedules


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Worldairlinesoperationstrends

2.9%

5.2%

8.9%

4.7%5.7%

7.4%

10.4%

0.7%

2.8%4.0%

5.5%

6.1%

3.9%

1.3%

0.2%

3.9%

5.6%

0.9% 0.7%

2.4%

10%

5%

0%

5%

10%

15%

India

AsiaPacific

China

Africa

EEurope

L

America

Mid

dleEast

N

America

W

Europe

World

4yearCAGR

YOYCAGR

2.8%

5.6%

8.0%

4.0%

1.2%

7.2%

1.6%

4.4%

0.4%

4.2%

4.4%

1.2%

1.6%

5.4%

0.8%

1.2%

2.1%

0.5%

10%

5%

0%

5%

10%

15%

India

AsiaPacific

China

Africa

EEurope

L

America

Mid

dleEast

N

America

W

Europe

World

3.2%

6.4%

9.7%

4.6%

2.1%

7.3%

8.8%

0.7%

0.6%

2.7%

5.1%

5.6%

3.1%

0.4%

4.6%

3.3% 2.8%

0.4%

3.8%

1.9%

10%

5%

0%

5%

10%

15%

India

AsiaPa

cific

China

Africa

EEur

ope

LAme

rica

MiddleEast

NAme

rica

WEur

ope

W

orld

Source: OAG Schedules. Q3/Q4 of each year

Passenger jets and turboprops

4.8% 5.5%

8.7%

4.8%3.6%

7.1%8.0%

0.7%1.9%

2.1%

2.7%

6.7%

2.9%

0.2%

1.6%

2.1%1.3%

0.4%

2.4% 2.0%

10%

5%

0%

5%

10%

15%

India

AsiaPa

cific

China

Africa

EEur

ope

LAme

rica

MiddleEast

NAme

rica

WEur

ope

W

orld

ASKs Departures

Block Time Capacity


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8

Worldwidetrend:largerequipment,moreseats

perdeparture

170

160

142

126 126

115

120

112 110

176

164

154

140

135

126124

118114

162 161

100

110

120

130140

150

160

170

180

M

iddleEast

China

A

siaPacific

India

Western

Europe

World

Average

Eastern

Europe

Africa

Latin

America

North

America

2008

2011

2012

+14

+11

+12

Averagecapacity(Seats)




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9

Andlongerflights

600

800

1,000

1,200

1,400

1,600

1,800

2,000

M

iddleEast

Eastern

Europe

China

Africa

A

siaPacific

India

G

randTotal

North

America

Western

Europe

Latin

America

2008

2011

2012

StageLength(km)

+237

+112

+127




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10

Regionaloperationstrends 2008

250

500

750

1,000

1,250

100 125 150 175

India

MiddleEast

EasternEurope

Africa

China

LatinAmerica

Asia Pacific

WesternEurope

NorthAmerica

AverageSta

geLength(miles)

Average Capacity per Departure

2008




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Regionaloperationstrends 2012

250

500

750

1,000

1,250

100 125 150 175

India

MiddleEast

EasternEuropeAfrica

China

LatinAmerica

Asia Pacific

Western

Europe

NorthAmerica

2012

AverageSta

geLength(miles)

Average Capacity per Departure




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12

Airlinesinallregionssharesimilardirectionsince

economiccrisis

50

0

50

100

150

5 0 5 10 15

Net change in average capacity per departure

2012 vs. 2008

Netc

hangeinaveragestageleng

th(miles)

perdeparture

China

India

LatinAmerica

Africa

N America

E EuropeMiddle East

W Europe

Asia Pacific

Africa

Asia Pacific

China

E Europe

India

L AmericaMiddle East

N America

W Europe




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13

Jetsretireatyoungerages

10

15

20

25

30

35

1992 1997 2002 2007 201

NARROWBODY JETS

WIDEBODY JETS

Factorsaffecting

retirement:

Rapidtechnology

advancement

Operatingeconomics

Residualvalue

Earlypartout

Lastofthelineeffects

Versatilityand

flexibility,e.g.,

passengertofreighter

conversionoptions

Source: Aviation Week, Aircraft delivered post 1960


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14

Anotherlookattheretirementtrends

0%

25%

50%

75%

100%

0 5 10 15 20 25 30 35 40 45

Freighter(3

years)

Freighter(5years)

Passenger(3years)

Passenger(5years)

Passengerjets

retirementages

show

moremovement

towardsyoungerage

thanfreighters

Narrowbody

retirementages

decreasedmorethan

widebody

passenger

jets

0%

25%

50%

75%

100%

0 5 10 15 20 25 30 35 40 45

NB3yr

NB5yr

WB3yr

WB5yr



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15

Worldfleetisexpectedtogrowto33,500in2021

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

2012 2015 2018 2021

Installedbase

CumulativeDeliveries

Expectover16,000

aircraftdeliveries,

of

which

5,200for

replacement

11,600forgrowth

Asiaaccountsfor

38%ofalldeliveries,

ranksNo.1among

worldregions


Aircraftunit


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16

Moredeliveriesareforgrowthratherthan

replacement

0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Growth

Replacement

RetainedFleet

Replacement

5,200 (31%)

Growth11,600 (69%)

Retained

16,400



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17

Asiawilltake38%of8,000+jetsonorder

Africa

Middle EastE Europe

L America

W Europe

N America

Asia

Africa

E EuropeL America

W Europe

N America

Middle East

Asia

Africa

EEurope

Middle East

L AmericaW

Europe

NAmerica

Asia

NB WB RJ0

20

40

60

80

100%

0

500

1,000

1,500

2,000

2,500

3,000

3,500

Unknown Africa EEurope LAmerica Middle

East

WEurope NAmerica AsiaPacific

Firm orders by region

Asiaordered54%

ofall

worldwide

RJs,morefocuson

therightgauge

Morethan2,000

NBfor

regional

growth,startup,

lowcost

Nearly

800

WB

to

continueWB

dominance



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18

Beyondfirmorders,Asiaislikelytotake6,000+

jets,retire800+by2021

(250)

0

250

500

750

2013 2015 2017 2019 2021

RETIREMENT

INCREMENTALDELIVERY

FIRMORDER

Strong

regional

GDP

growthwillresultin

sustainableaircraft

deliveriesthroughout

forecasthorizon

Amountoffuture

ordersareexpected

tomatch

the

front

loadedfirmordersas

of2012



19/29

19

2/3ofAsiadeliverieswillbeWB,whichaccount

for40%ofallWBdeliveries

0%

10%

20%

30%

40%

Installed

base2012

Delivery Installed

base2021

RJ NB WB 30%

63%

RJ

NB

WB

7

28%

65%

RJNB

WB

2012

2021

As % of world



20/29

20

Asianfleet:highsharesinmostpopularaircraft

families

31%

41%

36%

0% 25% 50% 75% 100%

737

3/4/5/6/7/8/9

777

A320/321/330

Asia OtherRegions

30%

52%

37%

0% 25% 50% 75% 100%

CFM56

3/

7

TRENT7/8/9/1000

V2500

A/D

Asia OtherRegions

Aircraft Engine



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21

Asia:Youngestfleetintheworld

14.5

11.2

12.412.4

10.4

15.7

14.3

0

2

4

6

8

10

12

14

16

Africa Asia EEurope L

AmericaMiddle

EastN

AmericaW

Europe

2012 2021

FleetinAsiais

generallyyoungerthusless

retirementsareexpectedthan

otherregions

Asaresult,

averagefleetage

inAsia

will

increase

* Jets only

Age


22/29

22

Theagefactor:determineswhenengineshop

visitskickin

In2012,56%ofaircraftin

Asiahavelessthan7years

inservice,

compared

with

34%inotherregions

In2021,49%ofaircraftin

Asiahave

less

than

7years

inservice,comparedwith

38%inotherregions

Engine

MRO

demand

in

Asia

willincreaseoverthenext

10yearswhenmorefirst

shopvisits

kick

in

56%34%

0%

50%

100%

Asia Other

7+years

07years

49% 38%

0%

50%

100%

Asia Other

7+years

07years

2012

2021

* Jets only

l d i i


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23

Incrementalorders impactonengineMROoutlook:backloaded,lateimpact

0

5

10

15

20

25

30

2012 2014 2016 2018 2020

Shopvis

itSpend

0

1

1

2

2

3

3

4

4

5

2012 2014 2016 2018 2020

Shopvis

itSpend

IncrementalOrders

FirmOrder

Inserviceaircraft

All engines V2500-A5

6.8%15%


f $


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ExpectworldMROtogrowfrom$49Bin2012to

$69Bin2021

1121

0

10

20

30

40

50

60

70

80

2012 2021

LAmerica

EEurope

WEuropeNAmerica

MiddleEast

AsiaPacificAfrica

19 30

0

10

20

30

40

50

60

70

80

2012 2021

Modifications

Components

LineMx

AirframeHeavyMx

Engine

World Engine MRO: 5.1% CAGRTotal Asia MRO: 7.3% CAGR

$B $B

* Jets only

i i l k f $ i


25/29

25

AsiaengineMROoutlook:from$4.4Bin2012to

$9.6Bin2021at9%CAGR

1,727

3,784

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

2012 2021

Asia Engine SV 9.1% CAGR

$B Shop visits

4.4

9.6

0

5

10

15

20

25

2012 2021

Modifications

Components

LineMx

AirframeHeavy

Mx

Engine

Asia Engine MRO spend: 9.0% CAGR

* Jets only


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Enginespendwillgrowtobecomemore

concentratedonfewermodels

44%60%

56%

40%

0%

25%

50%

75%

100%

2012 2021

Other

Top5

2012 Top 5:CFM56-7CF6-80C2V2500-A5RB211-535

CFM56-3

2021 Top 5:CFM56-7V2500-A5GE90-115BCFM56-5B

TRENT700

50%

67%

50%

33%

0%

25%

50%

75%

100%

2012 2021

Other

Top5

2012 Top 5:CFM56-7TRENT800PW4000-94CF6-80C2

V2500-A5

2021 Top 5:CFM56-5BTRENT700GE90-115BCFM56-7

V2500-A5

AsiaWorld

* Jets only


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Andthepredictionsare

00.10.20.30.40.50.60.70.80.9

1

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021

Asia fleetsize

No.1

Asia fleetsize

No.1No.1

Asia EngineMRO spend

No.1

Asia EngineMRO spend

No.1No.1

Asia TotalMRO spend

No.1

Asia TotalMRO spend

No.1No.1


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Challenges

HowdoMROs

inAsia

TakeadvantageofAsiamarketsspecificcharacteristics

Penetratewesternmarket Maintaincompetitivenesswhenlaborratesarerising,and

competitionsfromotheremergingregionssuchasEastern

Europeiscatchingon

Increase

engineering

contents

of

service

offering,

to

providevalueadded,completesolutions

Expandservicenetworktoestablishaglobalpresence

Maximize

margins

in

markets

where

OEM

maintain

dominanceinpartssupplies

ApplyContinuousImprovementtoreduceTATand

optimizecapacityutilization


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29

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