Worrying Trends For MRO

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If the MRO forecasts are right, then the industry has something to worry about, particularly in Europe. The sector is expected to grow by around 3.3% globally over the next ten years. That looks like solid growth compared to what is forecast for GDP in general. But within the framework of the air transport industry, it is actually less then it should be and it shows some remarkable structural trends.

That is because of simple math: air transport is to grow by up to 5% annually, depending on who you ask, so there is clearly much less work to be done per aircraft in the future, as fleets are getting significantly younger. Airlines simply can’t afford to fly around old aircraft that burn more fuel than those of their competitors. The massive orders for the Boeing 737 MAX and the Airbus A320NEO as well as earlier on the 787 and the A350 are a clear proof. And more than 500 aircraft are to be retired this year, that is many more than has historically been seen.

For the MROs, that is not good news. It means the pressure is rising, and it also means that managements have to get creative in finding market niches where their companies can still grow. What happens in a weak market is otherwise consolidation in whatever form.

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