Canaccord Genuity's firstGlobal Commercial Aerospace Maintenance, Repair, and Overhaul (MRO) survey, released late last month, revealed some interesting insight on near-term aftermarket growth. AWIN subscribers gota first take here.
One interesting issue that the AWIN story didn't dive into is the volatility in the components arena. Already naturally fragmented due to its diversity, a mix of positive and negative signs seems to be adding to everyday challenges.
On the plus side, de-stocking has significantly declined, meaning parts purchasing will be "normalized" with demand, Canaccord analyst Ken Herbert writes. Meanwhile, the increased availability of surplus parts (more on thathereandhere) is challenging everyone that supplies new parts.
Consistent with the industry, the outlook softened for thecomponent segment, but we would highlight that the drop here from the Q2/13 outlookwas more pronounced for component MRO shops. We did not see any significant differencegeographically between the component responses, but we believe many aspects of thecomponent industry are facing more pricing pressure in 2014, and the impact of usedsurplus material (USM) is going to continue to be a headwind for many component partssuppliers.
Canaccord pegs the used serviceable market at $3 billion per year, and growing at a rate that costs the overall aftermarket parts market 1% annually.