The commercial aftermarket is expected to have a strong 2025, but faces some headwinds that could constrain growth.
2024 was an excellent year for the commercial aerospace aftermarket (AM) and 2025 should continue the hot streak, analysts say.
In a new report, investment bank Jefferies calculates that aftermarket providers’ revenue jumped to 126% of 2019 levels in 2024 and forecasts an increase to 135% in 2025, or $89.2 billion. “Pent-up demand from pandemic delays along with the slower recovery of new aircraft deliveries and thus the expansion of the 6+ year aircraft fleet should serve as a catalyst for above-trend growth for the commercial AM in the coming years,” the investment bank said.
MRO providers have been among the top beneficiaries of Airbus and Boeing’s production woes, as fewer new planes have resulted in the increased flying of older jets that require more shop visits.
Some analysts have a more conservative outlook for 2025. “We aren’t as bullish as we were in the past,” Robert Spingarn and Scott Mikus of Melius Research say in a new report.
While Melius expects high-single-digit to low-double-digit sales growth in the segment and mid-teens earnings-per-share growth from commercial aftermarket stocks in 2025, it cites normalizing air traffic as one reason that the MRO boom could eventually moderate. Noting that IATA predicts 7.5% air traffic growth in 2025 as measured by available seat kilometers (ASKs), Melius describes that forecast as “optimistic given that capacity is fully recovered in all regions and U.S. airlines are trimming capacity growth plans.”
Other headwinds for the aftermarket in 2025 include a relatively low number of aircraft exiting warranty (more than five years old) due to below-average deliveries in pandemic-hit 2020 and 2021 as well as potential destocking if it turns out that airlines and MRO shops ordered too many spare parts in 2024.
However, the overall outlook for the commercial aftermarket remains strong. According to the Melius report, MRO firms will continue to benefit from strong balance sheets, manageable supply chain risk and increased business opportunities due to ongoing durability issues of Pratt & Whitney’s geared turbofan (GTF) engine.
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