Motion control supplier Moog’s aftermarket business is bouncing back quickly despite the company’s high exposure to widebody fleets that are being hit hard by the ongoing international long-haul traffic slump, company executives said. 

“The aftermarket has actually recovered better than we would have anticipated,” CEO John Scannell said during an Aug. 3 virtual fireside chat with Jefferies analyst Sheila Kahyaoglu. “We’re not back to pre-COVID levels yet but we’re probably back up towards 80% of what we had.” 

Moog is on pace to generate “just north” of $100 million in commercial aftermarket sales in its fiscal 2021, which runs through September, Scannell said on the company’s third-quarter (Q3) earnings call July 30. While still well short of the $140 million in annual sales reached in the last full year before the downturn 2020 downturn, the revenue points to a steady recovery. 

“We’re not anticipating that it will get much stronger as we look into the next quarter,” Scannell said on the earnings call. “But overall, for the year, it’s up very nicely and it’s stronger than what we would have thought 12 months ago or even six months ago.” 

In its last full fiscal year before the pandemic, Moog’s commercial business generated $681 million in sales within its Aircraft Controls unit, with original equipment (OE) generating about 80% of the revenue. About half of its OE business comes from flight control systems and other components it supplies to the Airbus A350 and Boeing 787 programs. 

Its aftermarket business, a mix of power-by-the-hour deals as well as direct sales to both airlines and manufacturers, has less exposure to the two programs, however. About 25% of its aftermarket sales come from the two newest twin-aisle models, said CFO Jennifer Walter. The rest comes from a mix of parts on a variety of legacy aircraft—primarily narrowbodies. 

This mix means that as international long-haul traffic demand returns, the corresponding uptick in 787 and A350 flying--and new deliveries that generate initial provisioning revenue--should help Moog’s aftermarket business offset ramifications of an expected step-up in older-aircraft retirements. 

“As we think through retirements, the narrowbodies affect our aftermarket,” Walter said. “But we’re on the newer platforms on the widebodies ... so as widebodies retire, it’s not necessarily on the platform that we’re on.” 

On the OE side, Moog is producing at below the 5 aircraft per month rate that Airbus and Boeing quote for the A350 and 787, respectively, though Boeing has temporarily slowed its pace to help manage post-production inspections and rework. 

“We’re running our production a little bit below that because there is still inventory in the [supply] chain,” Scannell said.  

Looking ahead, Moog sees its OE production remaining “stable” for the next year or so, and then increasing “gradually,” Scannell said. While long-haul traffic is expected to bounce back, Moog concedes the days of the 787 and A350 programs combining for 24 new widebodies aircraft per month, as they did not long before the current downturn, may not return.

“I’m not sure that there’s demand for 14 787s and 10 [A350s]”, Scannell said during the Jefferies event. “I think that’s a very high level of demand.”