Daily Memo: Double-Digit Sales Growth And 250-Day Turn Times—What Is Normal, Anyway?

After a few years of massive increases driven by the unprecedented pandemic-related shutdown and just as unpredictable surge in demand, growth rates in most commercial aftermarket segments are returning to normal.

But the original equipment (OE) side, grappling with delivery delays and problems with the latest platforms, remains far from normal.

Given the contrast, what exactly does “normal” mean in the MRO world? Double-digit year-over-year (YoY) growth rates, for starters.

“While we can appreciate the normalization of the commercial aftermarket, we continue to view the sector as a relative ‘safe haven’ supported by strong industry fundamentals,” RBC Capital Markets analyst Ken Herbert noted in a recent aerospace supply chain overview.

RBC’s most recent quarterly survey of 40-plus MRO providers found consensus around a few points. Year-over-year growth rates are falling—the so-called normalization. But demand for lift combined with ongoing OE challenges means more, older aircraft are still flying—and that’s helping keep growth rates high.

The latest RBC survey suggests parts purchasing and MRO sales will be up 11% in 2025. While down from some recent quarterly figures closer to 20% YoY, it’s still well above both historical and projected norms that are comfortably in the mid-single digits. Aviation Week Network’s just-released Commercial MRO forecast projects an average compound annual growth rate of 3.2% from 2025-2034, for instance.

Annual double-digit MRO growth will not go on indefinitely. From recessions to pandemics, reality has its ways of de-congesting airspace.

But as the RBC survey suggests, the elevated growth figures could be normal for a while.

The major manufacturers remain behind on production and delivery projections, and they will not catch up anytime soon. Boeing was behind before the International Association of Machinists strike shut down all 737, 767, and 777 production. Ramping back up post-strike will take some time, and getting to the company’s notional monthly goals on the big programs—50-odd 737s per month and 10 787s per month—will take several years at least.

The outlook for Airbus is better, but not ideal. RBC has lowered projected CFM Leap deliveries for the rest of 2024 and 2025, pointing to supplier constraints as the main culprit.

“Supply chain delays do not appear to be abating, and we expect [GE Aerospace] to lower Leap deliveries for the full year to now flat to down ~(10%), which still implies ~10% growth in 2H24,” RBC said.

The news out of manufacturers isn’t all gloomy. GE and Safran, 50/50 partners in CFM, fix a lot of engines, too. Their production-line struggles are somewhat offset by more demand to keep older platforms flying. Safran’s full-year services growth projection of 25% remains in play, RBC noted.

The good news even extends to Pratt & Whitney’s PW1000G geared turbofan program. The groundings linked to unplanned inspections of certain critical parts with possibly contaminated material aren’t going away soon. As Pratt has consistently projected, 300 or more aircraft will be on the ground on any given day for the next two or so years while engines crawl through shops.

MRO turnaround times (TATs) on the engines are also coming in as projected, meaning the operators’ disruptions—while still significant—are not at risk of worsening.

MROs responding to the RBC survey pegged average expected wing-to-wing TATs at 266 days—the lowest figure the quarterly survey has shown since Pratt unveiled the scale of the problem in mid-2023. Pratt’s TAT estimate from the beginning has been 250-300 days.

Finding some comfort in a 260-day narrowbody engine shop TAT? Just another eyebrow-raising development in the latest new normal.