MROs Still Focused On Workforce, Supply Chain Issues

Industry’s largest event dedicated to MRO was an appropriate setting for updates on the biggest challenges facing aftermarket stakeholders.

Panelists at Aviation Week’s MRO Americas, which drew more than 17,000 attendees to Chicago April 9-11, spent much of the event discussing the major pain points that have dominated conversations seemingly ever since the COVID-19-induced downturn ended: workforce instability and supply chain headwinds.

Material supply remains unpredictable. Some new parts are unavailable, and many repairs are taking longer than expected. A tight used serviceable material (USM) market limiting the numbers of high-demand parts—such as CFM International CFM56s and IAE V2500s needed for recent-generation narrowbodies—is not helping. But signs of price stability may be emerging.

“I think we’re at an interesting inflection point in the USM business, particularly as asset prices continue to rise, but you’re not directly seeing the hyperinflation at the component level on every single part like you saw over the past few years,” Setna iO Chief Commercial Officer Hunter Edens said. “You’re starting to see the component valuations plateau a little bit to where the market is a little bit normalized.”

The shift comes amid what Unical CEO Sharon Green dubbed hyperinflation for the most in-demand full assets.

Several factors, notably new-build aircraft delivery delays and unexpected issues with current-generation variants such as the Pratt & Whitney PW1000G geared turbofan, are keeping older aircraft in service longer. This is boosting demand for maintenance and material while suppressing the retirements and related USM generation that help support it. And when operators delay planned retirements of older Airbus narrowbodies and Boeing 737s while lessors face unexpected demand for term extensions from customers, prices for teardown candidates go up.

Green told attendees that 737 Next Generation airframes that were going for less than $1 million a year ago are now fetching prices closer to $2 million. But if the full asset prices do not translate into profits via part-outs, they will come down. Given the struggles at Boeing and lesser but still notable delivery slowdowns at Airbus, Green did not see that happening anytime soon.

“I don’t think it’s going to end this year or next year, and maybe not even the year after,” she said. “It really goes back to supply.”

On the capacity front, demand for airframe and engine work is strong. But many providers eyeing growth are proceeding with caution.

AAR is using lessons learned from its challenging but ultimately beneficial expansion into Rockford, Illinois, to avoid headaches when adding capacity, CEO John Holmes said at the event. The Rockford site opened in 2016 with a plan to attract widebody airframe maintenance but without any long-term contracts to help fill the facility, and ultimately survived on smaller deals and overflow work with existing customers. Customer stability finally arrived in April 2021 via a narrowbody airframe heavy check agreement with longtime AAR customer United Airlines.

“It took a long time to get that operation up and running,” Holmes said. Once the work was flowing, AAR had to ensure the facility had enough skilled technicians. A partnership with Rockford’s Rock Valley College helped solve that issue, Holmes noted.

AAR is working on major expansions in Miami and Oklahoma City, where it already has sizable airframe maintenance operations. While adding hangars to an existing location is different from a geographical expansion, the company is using Rockford as a template.

The Miami expansion, announced in March, was prompted by another deal with United for AAR to run a minimum of 10 maintenance lines in the South Florida city and Rockford combined. In Oklahoma City, AAR still needs more lines to support a 737 airframe maintenance contract extension with Alaska Airlines. The United and Alaska deals have helped both expansions meet AAR’s revised standards for investing in new facilities.

“We’ll only go into a new market and open a new facility or build a new facility [in an existing market] if three things are true,” Holmes said. “We’ve got to make a customer willing to make a long-term commitment. We have to have a friendly airport environment that’s supportive and will provide funding for construction. And we [need] access to talent.”

While external workforce pipeline partnerships remain popular, many companies are turning inward to meet demand for skilled employees.

Phil Shorten, head of human resources for U.S. Commercial at Airbus Americas, said the company has launched a program called Momentum to offer engineering skills development, particularly on the digital side. “It’s on the back of requests from our 200 apprentices that we take on each year who say, ‘We love your organization, it’s got a brilliant culture, I can see what my growth opportunities look like, but how do I try to develop all the skills in the company?’”

United Airlines, eyeing opportunity expansion for its workers, invested $20 million last year to open a new technical operations training center in Houston. “We’re going to build off of that and develop a lot of hands-on, advanced skill classes,” said Rick Brown, director of technical operations training and vice president of the United4Veterans business resource group at United. For instance, he said, the airline plans to offer capability for advanced composite repair training and ramp up other digital capabilities.

“We’re bringing in a simulator for our technicians to learn on so we don’t have to take an aircraft out of service for troubleshooting exercises,” he said. “We can do it on a desktop format, and the instructor can provide feedback as they go along.”

Leveraging in-house knowledge is also key for getting new hires up to speed. Simone Drakes, managing director of United’s Calibrate technician apprenticeship program, said part of the challenge stems from deficiencies in mandatory training standards. While new hires may have passed the necessary tests to gain certification, they often need extensive hands-on training to learn the skills to support a major operator.

“One of the things I would like to see the whole [MRO] community emphasize with the FAA is how to build regulations and requirements that map a career to the end result,” Drakes said. “Today, maybe the Airman Certification Standards are written for general aviation, but how many technicians do we know in our industry that want to stay working for a general aviation company? Their end job ends up being at an MRO or a major airline, but we’re not training to those standards. The training burden is then left to the organizations to bridge that gap.”

One way United is tackling the issue is through an arrangement with its technician union, the International Brotherhood of Teamsters, that partners senior technicians with newer technicians to provide on-the-job training for skills needed at the airline. United4Veterans has a similar mentorship program in which a military veteran joining the airline is paired with a seasoned veteran to learn the ropes.

In 2019, AAR launched a nine-week SkillBridge program with Embry-Riddle Aeronautical University targeting military veterans. According to Ryan Goertzen, the company’s vice president for workforce development, approximately 630 technicians have graduated from the program so far.

“We knew that we couldn’t hire every single veteran, and veterans want to move to different places, so we’ve got Northrop Grumman and Lockheed Martin as a part of that [program],” he said, adding that AAR has taken elements from SkillBridge to create more local programs. “In Oklahoma City, for example, we have five big military installations in the state. We almost have a pseudo mini program that’s very Oklahoma-specific that keeps the service members in the state. Thanks to the FAA workforce grant that AAR won, we are going to be spending a lot of those dollars specifically toward veterans there.”

Goertzen also is working with industry partners such as United through nonprofit Choose Aerospace, which aims to grow the MRO workforce pipeline by offering Part 147 aviation maintenance curriculums in high schools. Since it launched in 2020, Goertzen said, the program has spread to 28 schools and currently has about 527 enrolled students.

“Our mission is to get to 10,000 high school students by 2027,” he said. “The reason for 10,000 is because that’s how many are needed for us to meet the demand for aviation maintenance technicians. We are working closely with our partners [including] United, Southwest and Alaska to really push this initiative forward.”