aviation industry and mro sector trends q1 2014
DESCRIPTION
Global Economic Growth Regional Economic Indicators Air traffic demand and forecast Aviation / Aerospace Industry Dynamics,Growth rate Fuel and crude oil price February 2014 New technology aircraft New aircraft orders ,deliveries (Airbus vs Boeing) Global Air Transport Fleet Growth and Forecast Airline retirements Airline operating cost structure MRO sector growth ,demand and forecast by aircraft type and region MRO costs and trends for 2014TRANSCRIPT
www.reyyandemir.com April 2, 2014 www.reyyandemir.com
AVIATION INDUSTRY MRO TRENDS SUMMARY Q1-2014
-4
-2
0
2
4
6
8
10
Real GDP growth (Annual percent change)
Advanced Economies
Emerging market and developingeconomies
Global economic indicators show improvement… «Developing-country growth is firming, thanks to the recovery in high-income
economies as well as moderating, but still strong, growth in China.»
Source: IMF and World Bank DATABASE reyyandemir.com 2
0
5000
10000
15000
20000
25000
30000
35000
19
80
19
82
19
84
19
86
19
88
19
90
19
92
19
94
19
96
19
98
20
00
20
02
20
04
20
06
20
08
20
10
20
12
20
14
20
16
20
18
Nominal GDP (Billions of U.S. dollars)
The Euro area is out of recession…
«The economies of the Middle East and North Africa region remain depressed.»
Africa
N.America
Middle East
Asia Pasific
Europe
S.America
Source: IMF and World bank DATABASE reyyandemir.com 3
The size of aviation GDP footprint depends on country’s economic development (GPD per capita)… Aviation and Tourism GDP
Source : http://www.benefitsofaviation.aero/Pages/default.aspx reyyandemir.com 4
0
0,5
1
1,5
2
2,5
3
Bill
ion
s
Global Air Transport Passenger Carried
1980-2012
Passenger travel demand increased 396 % from 1981 to 2012…
«It is expected to increase %5 over next 20 years, contributing the increases in aircraft production.»
Source: http://databank.worldbank.org/data/views/reports/tableview.aspx and http://www.boeing.com/assets/pdf/commercial/cmo/pdf/Boeing_Current_Market_Outlook_2013.pdf reyyandemir.com 5
Source:http://www.iata.org/publications/economics/fuel-monitor/Pages/price-development.aspx
Fuel costs, as an percentage of total operating costs of airlines have risen from an average of 13.6 % in 2001 to 31 % in 2013.
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«Crude oil is expected to remain stable around $100/bbl in 2014 and 2015. Jet fuel is expected to average almost $125/bbl in 2014 (IATA)»
The investments in next-gen fuel efficient aircraft become very attractive for airlines operators.
reyyandemir.com
1
71
14 12 20
118
-10
44
14 12 20
80
-20
0
20
40
60
80
100
120
140
A319 A320 A321 A350-900 A380 TOTAL
Airbus Orders
2014 Gross Orders
2014 Net Orders 183
1 4 1
189 171
1 4 1
177
0
20
40
60
80
100
120
140
160
180
200
B737 B747 B777 B787 Total
Boeing Orders
2014 Gross Orders
2014 Net Orders
7 Source:Boeing and Airbus
«New technology fleet including A380, 747-8, 787, A350, A230NEO, 737MAX and 777X will grow significantly over the next decade.»
The “new technology” fleet grows hugely with significant implications for MRO suppliers.
«The current civil air transport fleet is more than of 26,000 aircraft.»
Regional Jet 17%
Turboprop 15%
Widebody jet
18%
Narrow body jet
50%
Source: FlightGlobal ACAS September 2013 Source:TeamSAU
Regional Jet 17%
Turboprop 15%
Widebody jet
18%
Narrow body jet
50%
Total :32,900 by 2024
«In 2024, the fleet will grow to 32,900 , 3.6% CAGR growth rate expected.»
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New aircraft will increase airline revenue by
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«Promising ~%15 better fuel burn rate, lower potential carbon emissions costs and maintenance.»
Source:Penton
Global Air Transport Fleet Growth 2013–2023 by - Region
Source: FlightGlobal ACAS September 2013
0
2000
4000
6000
8000
North America
0
2000
4000
6000
8000
Europe
0
2000
4000
6000
8000
Middle East &Africa
0
2000
4000
6000
8000
Latin America
0
2000
4000
6000
8000
Asia Pacific
0
2000
4000
6000
8000
China & India
2013 2018 2023 «Middle East fleet growth is the fastest of all world regions – at 5.6% CAGR through to 2023»
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Air Transport Retirements 2014 – 2023
A320 Family 24%
737 Classic 14%
767 9%
CRJ-200 9%
737NG 8%
MD-800 8%
ERJ-135 8%
Others 20%
«45-50% of new aircraft deliveries in the next 20 years will be for aircraft replacements.»
Source: FlightGlobal ACAS September 2013 reyyandemir.com 11
Airline Operating Cost Structure
Typical Airline Cost Breakdown
Fuel 35%
Labor& Benefits
28%
Depreciation 5%
Aircraft Rent 3%
Others 14%
Line 3%
Components 3%
Engines; 6%
Modifications 1%
Airframe 2%
Source: ICF SH&E Analysis
Typical Airline’s MRO Cost Breakdown
Maintenance 16%
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Line 20%
Components 26%
Engines 47%
Modifications 7%
2013 Global MRO Demand by– MRO Segment
Source: ICF SH&E Analysis
«The current air transport MRO market is
$60.7 billion.»
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«Engine & Component MRO are the largest
segments of the market.»
2013 Global MRO Spend by– MRO Segment
Source: ICF SH&E Analysis
The Global MRO market is expected to grow to $89B by 2023,
at 3.9% per annum.
10 15
13 20
24
36 4
6
9
12
$0
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
2013 2023
Line Components Engines Modifications Heavy Airframe
MRO Market $60,9B by 2013
MRO Market $80,9B by 2023
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Engine Overhaul shows the strongest growth followed by Component MRO.
Difference in $ MRO Spend, 2023 vs. 2013 – By Global Region
MRO spend growth will driven by Asia Pacific and Middle East more than $13B.
Source: ICF SH&E
2,9
$0
$2
$4
$6
$8
North America
4,9
$0
$2
$4
$6
$8
Europe
6,4
$0
$2
$4
$6
$8
Middle East &Africa
2,8
$0
$2
$4
$6
$8
Latin America
7,1
$0
$2
$4
$6
$8
Asia Pacific
3,9
$0
$2
$4
$6
$8
China
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Aviation Industry Summary
More than 1,400 new aircraft will be delivered through 2023
As lon as fuel and component prices continue on their present trajectories, younger aircraft are going straight to part-out.
Safety, fuel and technology will accelerate the need for MROs to build
new capabilities
Airbus and Boeing will preserve “The Duopoly” in the market
Aircraft Retirement New MRO Capabilities
OEM Duopoly New Aircraft Deliveries
reyyandemir.com 16 Source: Aviation week
MRO Trends Summary
Air Transport Surplus Parts Market is ~$3 billion. centers in growth regions Parting-out will
accelerate . Further component OEM licensed service .
Aircraft OEMs are fast becoming major MRO players threating to independent MROs.
Next-Gen aircraft introduction resulting barriers to MRO entry.
Operators having larger, with better bargaining power over MRO costs.
MRO market consolidation expectations in the next years.
New partnerships with OEMs
More focus around flexibility and speed
Surplus Effect New Strategies OEM & Airline
reyyandemir.com 17 Source: Aviation week, TeamSAI, ICF SH&E
Thanks for your time. Feel free to contact me if you have any question.
reyyandemir.com 18
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