Pandemic Brings About MRO Diversification

As the novel coronavirus crisis has seen aftermarket revenues hit by a slump in demand for aircraft repair services, MROs have looked for new ways to adapt during the crisis. For those with the means to invest, adding new capabilities or expanding existing ones have been implemented to not just add new streams of revenue, but to also carve out new service lines for the long-term. 

In the immediate outbreak of the crisis, MROs typically looked to cargo and military maintenance as in lieu of commercial aircraft. Examples of this in the cargo space include UK-based Caerdav moving into passenger to freighter conversion work focused on Boeing 737 aircraft. STS Aviation Group decided to split the work between commerical and military at its Birmingham, UK facility to accommodate the conversion of Boeing 737NG aircraft into Wedgetail Airborne Early Warning Mk1 aircraft in the summer of last year.

MRO business diversification has been particularly important to independent maintenance providers looking to form new niches, with the likes of StandardAero and AAR highlighting this importance as a means of offsetting larger impacts from the virus. Another MRO who pushed this diversification of services is Canada’s KF Aerospace. “The biggest eye opener over the past 12 months has been the importance of a diverse work portfolio,” says Gregg Evjen, the company's VP, engineering and maintenance, who cites structural and avionics modifications work as being an example of this diversity.

“We [KF Aerospace] focus on a balance between maintenance and modification work. This helps provide a balance in the type of work we do, whether its cargo or passenger aircraft related, and helps maintain a highly skilled workforce with respect to our aircraft maintenance engineers, our engineering department and our manufacturing department,” he says.

Other MROs have also sought to broaden their airframe repair offerings, with narrowbody specialists typically opting for 737Max and A320neo certifications. While the recovery prospects for the widebody aircraft segment are anticipated to be slower, this hasn’t deterred MRO providers. Among those diversifying includes Vallair, which earlier this month, ventured into widebody aerostructure repairs with a A330 offering.

While it is believed by analysts that the crisis could lead to some OEMs pairing back their aftermarket intentions, some are nevertheless looking at MRO as a means of offsetting disruptions to program developments and production schedules.

Japanese manufacturer Mitsubishi Heavy Industries (MHI) outlined plans to increase MRO activities at the end of 2020 having paused its M90 Spacejet aircraft development. It aims to tap into its knowledge as a type certificate holder for the CRJ program it acquired from Bombardier, while also stating its desire to work on non-CRJ aircraft types.

The engine segment, hit by the dual challenge of deferred shop visits, has nevertheless proved fertile ground for companies. The past 12 months alone have seen several MROs establish designated engine businesses. While demand for heavy shop visits has decreased over the past 12 months, lighter, quick turn engine work has remained steady and will continue to do so as the industry gradually emerges from the crisis. In Europe, both FL Technics and Magnetic MRO have started specialized engine businesses in the past 12 months. 

Meanwhile, in Asia-Pacific, Singapore-based SIA Engineering Company consolidated its engine services into one business by establishing a new engine MRO division offering quick turn shop visits and light maintenance services for CFM LEAP-1A and -1B engine.

Interiors work is expected to hit a lull with demand dampened by carriers looking to preserve liquidity and cut costs. This has been noted by the market, and companies like Triumph Group, which generates the majority of its MRO work from accessories, structural repair and interiors, has stated its intention to diversify its product portfolio looking away from interiors to “build on what we do in engine components and structures.”

But while MROs have been quick to diversify their businesses into existing parts of the segment, other opportunities may lie outside conventional passenger travel long-term. These include areas such as the space industry as a new source of revenue for MRO providers, given the development of ties between MRO providers and the Virgin Galactic spaceflight company, in addition to MROs such as Lufthansa Technik undertaking work on NASA projects. Urban Air Mobility is also one area where companies may look to increase capability, given the relative scarcity of its existing aftermarket infrastructure to date.