×

Maintenance Repair & Overhaul Space Air Cargo

Home- Stories

MRO Spending in 2020 May Fall by Over Fifty Percent, Says IBA

: Aug 5, 2020 - : 6:44 pm

Covid-19 has had a drastic effect on the MRO industry. According to aviation data and advisory company IBA, 2020’s total MRO spend will be less than half of the approximately $90 bn that was initially forecast.

At its recent “Changing Landscape of the Aftermarket Industry” webinar,  the company said that Covid-19 has driven a mix of airline failures and administrations, early lease returns and accelerated retirements.  Around 800 aircraft has been identified as subject to exit from their current fleets in the short term, of which around 450 face permanent retirement. Around half of expected retirements are aircraft over 20 years old while younger retirements expect to feature types including the A380, A340-600 and 777-200LR.

According to IBA, pre-Covid aftermarket supply chain challenges remain alongside a list of variables that are capable of disrupting supply and demand. These include fleet utilisation, new fleet introduction, OEM production rates and aftermarket strategies and labour migration, as well as pricing pressure affecting the threshold of material becoming beyond economic repair (BER).

Narrowbody aircraft utilisation is increasing currently while the widebody fleet is lagging behind, according to the firm. Early retirement is set to disrupt the supply chain due to the increase it will drive in aircraft part outs until saturation occurs, along with reduced engine shop visits as a result of low utilisation rates.

IBA expects engine shop visit demand to collapse for the next two to three years as both utilisation and maintenance expenditure see massive reductions. Later stage shop visits on mature engines are most vulnerable but all engines are seeing significant maintenance offsetting.

Suppliers will be compelled to assess their current and future inventories for interchangeability and flexibility across new aircraft platforms. Aircraft in the pipeline for part out prior to Covid, or currently in a stub lease prior to part out, will see their residual values impacted by supply and demand uncertainty.

“The MRO industry needs to take a more creative approach to maintenance solutions,” said Phil Seymour, Company President of IBA: “That includes OEMs and regulators devising safe and flexible ways to prevent aircraft having to undergo such extensive and expensive checks, so that savings can be made at a time when cash preservation is vital, without safety being compromised.

“Whilst we expect the market to rebound by the start of 2022, we expect high levels of redundancies of between 35% and 70% in the interim, and so a flexible approach by the MRO industry will be crucial to working through future uncertainty.”

MORE NEWS

Headquartered in Singapore with reporters spread across all major regions, GBP Aerospace & Defence is a leading media house that publishes three publications that serve the aerospace and defence sector - Asian Defence Technology, Asian Airlines & Aerospace and Daily News. Known industry-wide for quality journalism, GBP Aerospace & Defence is present at more international tradeshows and exhibitions than any other competing publication in the region.
For over three decades, our award-winning team of reporters has been producing top-notch content to help readers stay abreast of the latest developements in the field of commercial aviation, MRO, defence, and Space.

Popular Posts

Copyright 2024. GBP. All Rights Reserved.

Home Defence & Security Space Commercial Aviation Maintence Repair & Overhaul Daily News Events About Us