The engine maintenance, repair and overhaul (MRO) aftermarket rebound could be particularly kind to GE, which has seen its engine fleet expand at a faster rate than the global figures, setting the enginemaker up to grab a greater share of the MRO pie, a Jefferies analysis shows.
Jefferies calculates that the GE-powered fleet, including CFM-equipped aircraft, expanded by about 670 aircraft last year, to 15,600. The entire fleet grew by just 640 aircraft.
Notable growth took place in the CFM-powered fleet, which expanded 6% by adding 530 aircraft. The GEnx fleet doubled to 136 aircraft, thanks to 787 and 747-8 deliveries, and Jefferies thinks it could double again in two years.
GE and its CFM affiliate now account for about 60% of the installed fleet, Jefferies calculates. The steady stream of new technology coming in combined with a large installed base that has both older and newer aircraft sets the company to leverage its MRO opportunities for years to come.
Engine work accounts for about 40% of the $60 billion total MRO market, with parts accounting for up to 70% of engine overhaul costs.
In recent years, cost-conscious carriers have been deferring non-essential engine overhaul work. That trend appears to be abating based on recent reports from manufacturers of more parts being used per engine shop visit, suggesting an uptick in overhaul work (DAILY, April 23).
Team SAI projects that engine work will grow at about 4% on average annually through 2023, with slower growth in the latter half of the decade as older, more maintenance-hungry models are steadily replaced by newer ones.
Jefferies says GE’s product line has the manufacturer well positioned to ride out the retirements and reap benefits down the road. “GE has a meaningful development effort across all thrust classes and appears to have a measured roll-out of new products through the end of the decade, allowing it to use its technology to obsolete existing engines in the installed fleet,” the analysts note.