Sajedah Rustom, CEO AJW Technique, discusses her outlook for the market and the trends she’s seeing at the component MRO in Montreal.
What repair services and parts are customers requesting now—and/or looking into for later this year?
From a repair perspective, we have certainly seen a rise in the amount of preservation maintenance items and hard-time components (HTC) such as slides and rafts, oxygen masks and safety valves. We have also seen a diverse selection of components arrive as many of our customers have taken advantage of our Quote and Hold program where we hold components in-house after conducting a thorough evaluation and providing a detailed quote to the customer. This has helped our customers conserve cashflow, plan their financial exposure and reduce costs while increasing profit. We have ramped up our inventory in strategic locations with other HTC items, battery packs and smoke detectors for quick turnaround.
How are you adjusting your business to deal with the market during the pandemic?
COVID-19 has accelerated our digital transformation plans. We are focused on simplification, innovation and digitization of our processes with exciting new artificial intelligence systems that will bring cost reductions to our customers. We are in constant communication with our customers creating agile solutions to help them battle through these unprecedented times. We proactively work with our contracted customers to help mitigate the effects by adjusting their minimum contracted hours whilst guaranteeing the continuation of negotiated levels of support, allowing them to focus on their business plans. AJW recently launched a new product line, One-Stop Lease and Repair, where customers can select their own bespoke package of components for leasing with an allowance for in-house repairs throughout their contract terms. Customers benefit from minimal financial and residual risk with no upfront costs, and it negates the requirement to own their own stock and associated depreciation while enjoying the benefit of on-site access to high priority components.
What is AJW Technique’s outlook for the civil aviation aftermarket for the rest of 2020 and 2021?
The aviation aftermarket industry is certainly heading for harder times. We are unlikely to see a return to pre-COVID operations before 2023. However, volume at AJW Technique has been picking up since drops in the second quarter, and we have some exciting new initiatives in the pipeline to capture more of the market as well as expanding our capabilities. AJW is in strong financial position to weather the storm and take advantage of the deals that will be coming as a result of the crisis.
I’ve heard that $5,000 is about the parts price point that slows down sales these days. True?
Pre-COVID, customers were confident they were getting the best possible deals for the quality and experience that AJW offers. However, post-COVID, we have seen an increase in the inflow from lower valued parts like oxygen masks, emergency power supplies, handsets and batteries than the more expensive units as customers are determined to preserve cash and ride out the wave. $5,000 is about the price point we see here at AJW with slow increases, in part due to the strong adoption of the innovative promotions we have launched such as the Quote and Hold program.
Any predictions for new vs used serviceable material sales for the rest of the year? Is AJW concerned about a possible oversupply of used serviceable material next year for any aircraft or engine types?
Given that the industry is moving to a smaller, leaner and more efficient fleet of narrowbody aircraft to accommodate the predicted reduction in passengers through to 2023, we are expecting an increase in the retirement and subsequent surplus of Airbus A310, A330, A340, Boeing 747, 767 and 777 inventory. While some of these aircraft will be destined to a new life as cargo aircraft, there will be an upsurge of used serviceable material as it becomes available, and we intend to work with airlines to effectively utilize it. For engines, we expect airlines to defer maintenance and utilize green-time engines rather than pay the cost for an engine overhaul.
