Europe MRO Forecast 2015-2025

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Transcript of Europe MRO Forecast 2015-2025

  • Oliver Wyman

    TURBULENCE AHEAD DISENGAGE THE AUTOPILOT Tuesday, October 13th 2015

    Christopher Doan

    Vice President

    2015-2025 GLOBAL FLEET & MRO MARKET FORECAST

  • 1 1 Oliver Wyman

    Oliver Wyman acquired TeamSAI and integrated the business into CAVOK, its aviation technical consulting and services practice

    ~150 Dedicated CAVOK employees located

    in DFW and ATL

    (Supported by +250 Oliver Wyman

    aviation consultants)

    +70% of CAVOK staff hold FAA certification/license

    +2,300 years of combined airline operations expertise

    The respected TeamSAI Global Fleet & MRO Market Forecast, and related

    betterinsightTM market intelligence data, remains available at

    www.PlaneStats.com/betterinsight

  • Global Fleet &

    MRO Market Outlook

  • 3 3 Oliver Wyman

    The global air transport jet and turboprop fleet will grow by more than 10,000 net new aircraft by 2025

    2015-2025 Global Fleet Forecast

    by Aircraft Class

    Key Fleet Forecast

    Growth Rates

    Global fleet will grow on

    average 3.7% annually over

    the full forecast period

    Passenger fleet expected to

    grow at 3.8% annually

    Cargo fleet forecast to grow

    by 2.3% annually

    Narrowbody aircraft will lead

    the growth

    Regional jets will actually

    decline in the mix

    13,124 16,949

    21,089

    4,686

    5,753

    7,181

    3,396

    3,222

    2,906

    2,721

    3,079

    3,232

    5.2%

    4.2%

    -1.0%

    2.5% 23,927

    29,003

    34,408

    4.5%

    4.5%

    -2.0%

    1.0%

    0

    5,000

    10,000

    15,000

    20,000

    25,000

    30,000

    35,000

    40,000

    2015 2015-2020CAGRS

    2020 2020-2025CAGRS

    2025

    Nu

    mb

    er

    of

    Air

    cra

    ft

    Forecast Year and Forecast CAGR

    Narrowbody Widebody Regional Jet Turboprop

    The growth outlook, however, varies widely from region to region

    3.9%

    3.5%

  • 4 Oliver Wyman 4

    A 5 pt spread in regional growth rates leads to a significant share shift over the decade ahead

    The mature North American and Western European markets will continue to

    undergo significant refleeting efforts during the next 10 years

    722 North America

    Europe

    Latin America

    & the Caribbean

    Africa / Middle East

    Asia Pacific / China / India

    0.9%

    2.8%

    4.7%

    5.5%

    6.1%

    6,131

    1,720

    1,965

    997

    1,562

    5,235

    2015

    Fleet Size

    10YR

    CAGR

    2015- 2025

    Absolute Growth

    2,204

    6,452

    7,420

  • 5 Oliver Wyman 5

    A 5 pt spread in regional growth rates leads to a significant share shift over the decade ahead

    The mature North American and Western European markets will continue to

    undergo significant refleeting efforts during the next 10 years

    2025

    Fleet Size

    North America

    Europe

    Latin America

    & the Caribbean

    Africa / Middle East

    Asia Pacific / China / India 6.1%

    7,420

    6,131

    1,720

    2,204

    6,452

    8,096

    2,717

    3,766

    11,687

    8,142

  • 6 6 Oliver Wyman

    43% of all new aircraft deliveries will replace old technology aircraft over the forecast period

    The systematic elimination and replacement of older aircraft with new technology

    aircraft will drive significant change is the business for airlines and maintainers

    New Cargo Deliveries

    423

    New Passenger Deliveries

    18,068

    664

    Cargo Retirements

    7,346

    Passenger Retirements

    Passenger Fleet

    716

    P2F Conversions

    Cargo Fleet

  • 7 7 Oliver Wyman

    43% of all new aircraft deliveries will replace old technology aircraft over the forecast period

    The systematic elimination and replacement of older aircraft with new technology

    aircraft will drive significant change is the business for airlines and maintainers

    New Cargo Deliveries

    423

    New Passenger Deliveries

    18,068

    664

    Cargo Retirements

    7,346

    Passenger Retirements

    Passenger Fleet

    716

    P2F Conversions

    Cargo Fleet

    10,481 Net Growth

  • 8 8 Oliver Wyman

    The result is a staggering change in fleet mix by 2025

    2015 Global Air Transport Fleet

    by Vintage

    2025 Global Air Transport Fleet

    by Vintage

    The significant move towards late generation aircraft, in addition to improving airline

    costs, will undoubtedly impact MRO dynamics

    1970's 2%

    1980's 26%

    1990's 63%

    2000's 9%

    1970's 0.1%

    1980's 9%

    1990's 46%

    2000's 16%

    2010's 29%

  • 9 9 Oliver Wyman

    The fleet dynamics of the period result in a forecast that tops $100 billion by 2025, a 4.1% average annual growth rate

    2015-2025 Global MRO Market Size Forecast

    by MRO Segment

    2015-2025 Global MRO Market Share Forecast

    by MRO Segment

    Airframe Heavy Maintenance costs improve with the new technology while both

    Engine and Component sectors will take a larger share

    22% 19% 17%

    42% 45% 47%

    19% 18% 19%

    18% 18% 18%

    0%

    10%

    20%

    30%

    40%

    50%

    60%

    70%

    80%

    90%

    100%

    2015 2020 2025

    Forecast Year

    Airframe Engine Component Line

    MR

    O S

    pen

    d in

    2015 D

    oll

    ars

    ($U

    SB

    )

    Ma

    rket

    Sh

    are

    $14.5 $15.9 $16.7

    $27.9 $37.1

    $46.8 $12.4

    $15.2

    $19.2

    $12.3

    $15.0

    $17.8

    1.9%

    5.9%

    4.1%

    4.0% $67.1

    $83.2

    $100.4

    1.0%

    4.8%

    4.7%

    3.5%

    $0

    $20

    $40

    $60

    $80

    $100

    $120

    2015 15-'20CAGRS

    2020 20-'25CAGRS

    2025

    Bill

    ions

    Forecast Year and Forecast CAGR

    Airframe Engine Component Line

    4.4%

    3.8%

  • 10 10 Oliver Wyman

    Shadowing the fleet trends, large differences in regional growth rates will lead to a significant shift in MRO demand over the decade ahead

    Asia Pacific / China / India will be challenged to build the necessary infrastructure

    capable of handling the volume of MRO the combined region will demand

    $1.3 North America

    Europe

    Latin America

    & the Caribbean

    Africa / Middle East

    Asia Pacific / China / India

    0.6%

    3.3%

    7.3%

    5.5%

    6.6%

    $17.9

    $3.2

    $7.5

    $18.3

    $7.0

    $3.3

    $5.3

    $16.5

    2015

    MRO Spend ($USB)

    10YR

    CAGR

    2015- 2025

    Absolute Growth ($USB)

    $20.0

  • 11 11 Oliver Wyman

    Shadowing the fleet trends, large differences in regional growth rates will lead to a significant shift in MRO demand over the decade ahead

    Asia Pacific / China / India will be challenged to build the necessary infrastructure

    capable of handling the volume of MRO the combined region will demand

    2025

    MRO Spend ($USB)

    North America

    Europe

    Latin America

    & the Caribbean

    Africa / Middle East

    Asia Pacific / China / India 6.6%

    $20.0

    $17.9

    $3.2

    $7.5

    $18.3

    $21.3

    $24.9

    $6.5

    $12.8

    $34.8

  • European MRO Market

    Outlook

  • 13 13 Oliver Wyman

    Passenger traffic is picking up; however, the fleet growth will be constrained over the next 10 years as half of all the new aircraft deliveries are slated to replace aging aircraft

    2015 PASSENGER TRAFFIC (RPK) GROWTH

    6.8%

    2015 CURRENT FLEET

    6,131

    4,100+

    2015-2025 AIRCRAFT DELIVERIES

    2,100+

    2015-2025 AIRCRAFT RETIREMENTS

    +2.8%

    2015-2025

    FLEET CAGR

  • 14 14 Oliver Wyman

    $2.9B in MRO from 70s and 80s vintage aircraft will be lost over the next 10 years; however, 90s, 00s and 10s vintage aircraft will see a $9.9B increase

    Top 10 European Aircraft Families in 2015

    Top 10 European Aircraft Families in 2025

    A320C/NEO

    737NG/MAX

    777

    747

    A330

    A340

    737CL

    757

    767

    EJET

    A320C/NEO

    737NG/MAX

    777

    A330

    787

    A350

    747

    A340

    A380

    EJET

  • 15 15 Oliver Wyman

    Oil prices have plummeted over the past year and could remain low over the short term. Many are concluding that this will cause airlines to alter fleet plans and drive an increase in MRO.

    Crude Oil Spot Price

    per Gallon

    Aircraft Profitability Curve

    Current Generation vs New Generation

    $0.50

    $1.00

    $1.50

    $2.00

    $2.50

    $3.00

    2,000 2,800 3,600 4,400$0.50

    $1.00

    $1.50

    $2.00

    $2.50

    $3.00

    2014 2015

    WTI Brent Jet A

    Sp

    ot

    Pri

    ce p

    er

    Gall

    on

    ($U

    SD

    )

    Jet-

    A S

    po

    t P

    ric

    e p

    er

    Ga

    llo

    n (

    $U

    SD

    ) Utilization in Hours

    1 YEAR

    PRICE DROP

    New gen aircraft are

    more profitable than

    current gen

    New gen air