MRO Forecast Market Trends - Forecast Market Trends September 23, 2015 Presented by: ... The...

download MRO Forecast Market Trends -   Forecast  Market Trends September 23, 2015 Presented by: ... The current civil air transport fleet consists of over27K aircraft MRO FORECAST

of 32

  • date post

    06-Feb-2018
  • Category

    Documents

  • view

    215
  • download

    3

Embed Size (px)

Transcript of MRO Forecast Market Trends - Forecast Market Trends September 23, 2015 Presented by: ... The...

  • 0icfi.com/aviation |

    MROForecast&MarketTrendsSeptember23,2015

    Presentedby:JonathanM.BergerVicePresident ICFInternationaljberger@icfi.com

  • 1icfi.com/aviation |

    TodaysAgenda:

    founded2001,joinedICFin2011

    founded1963,joinedICFin2007May2010May2014

    MROForecast

    MeettheFrackers!

    Thenotsomightymighty BRICHouse

  • 2icfi.com/aviation |

    TodaysAgenda

    MROForecast

    MeettheFrackers!

    Thenotsomightymighty BRICHouse

  • ICFInternational|icfi.com ICF International 2015

    NorthAmerica31%

    AsiaPacific26%

    Europe25%

    SouthAmerica

    8%

    MiddleEast5%

    Africa5%

    NarrowbodyJet51%

    WidebodyJet18%

    Turboprop17%

    RegionalJet14%

    Thecurrentcivilairtransportfleetconsistsofover 27KaircraftMROFORECAST

    Source:FlightGlobalACASSeptember2014

    2014GlobalAirTransportFleet

    ByAircraftType ByGlobalRegion

    27,531Aircraft

    27,531Aircraft

  • ICFInternational|icfi.com ICF International 2015

    Thecombinationofstrongairtraveldemandandtheneedtoreplaceageingaircraftwilldrivefleetgrowthat3.2%annually

    MROFORECAST

    Source:ICFInternational,ACASSeptember2014

    ICFInsight

    Airtravelgrowthof~3.8%

    Fuelcostsin$80/bblrange

    ~19,000aircraftdeliveries

    ~8,600aircraftretirements

    10YearGlobalAirTransportFleetGrowth

    0

    5,000

    10,000

    15,000

    20,000

    25,000

    30,000

    35,000

    40,000

    2014 2024

    AfricaMiddleEastSouthAmericaEuropeAsiaPacificNorthAmerica

    3.8%

    2.7%

    4.7%

    1.4%

    5.3%

    4.8%

    27,500

    31% 26%

    37,900

    CAGR

    3.2%Average

    26%

    25%

    8%

    30%

    24%

    9%

    # Aircraft

  • ICFInternational|icfi.com ICF International 2015

    NorthAmerica29%

    AsiaPacific27%

    Europe27%

    MiddleEast7%

    SouthAmerica6%

    Africa4%

    Engines40%

    Components22%

    Line17%

    Airframe15%

    Modifications6%

    ThecurrentairtransportMROdemandis$62.1B;withAsiaequivalenttoNorthAmericaandEuropeinmarketsize

    MROFORECAST

    2014GlobalMRODemand($USD)

    Source:ICFInternationalForecastin2014$USD,exclusiveofinflation

    $62.1B

    ByMROSegment ByRegion

    $62.1B

  • ICFInternational|icfi.com ICF International 2015

    $60.7B

    $0

    $10

    $20

    $30

    $40

    $50

    $60

    $70

    $80

    $90

    $100

    2014 2024

    ModificationsHeavyAirframeLineComponentsEngine

    Theglobal MROmarketisexpectedtogrowby3.8%perannumto$90Bby2024

    MROFORECAST

    10YearGlobalMROSpendGrowth($USD)

    15%

    17%

    22%

    40%

    13%

    17%

    24%

    38%

    6%

    8%

    ICFInsight

    Averagegrowthisforecasttobe3.8%CAGR

    Thestrongestdriversofgrowtharetheengine andcomponentmarkets

    Reducedlaborintensityofairframeheavychecksasthefleetrenewsandincreasedintervals...offsetinemergingmarketsbyincreasinglaborrates

    Aircraftupgrades(e.g.interiors,winglets)drivehighmodificationsgrowth

    2.6%

    3.7%

    4.5%

    3.5%

    5.9%

    CAGR

    3.8%Average

    $90B$90B

    $62.1B$62.1B

    Source:ICFInternationalForecastin2014$USD,exclusiveofinflation

  • ICFInternational|icfi.com ICF International 2015 7

    AirlineindustryeconomicswillcontinuetodrivegrowthinMROoutsourcing

    MROFORECAST

    24%

    60%

    82%

    88%

    21%

    53%

    71%

    78%

    17%

    48%

    66%

    74%

    0% 20% 40% 60% 80% 100%

    Line

    HeavyAirframe

    Components

    Engine

    PercentofDirectMaintenanceSpendOutsourced

    2008

    2015

    2020

    GlobalOutsourcingbyMROSegment

    Source:ICFAnalysis

    ICFInsight

    Airlinescurrentlyoutsourcenearly65%ofallMROactivity

    Capitalintensivesegments(e.g.engines&components)willdriveoutsourcinggrowth

    LaborintensiveairframeworkwillcontinuetoRightShore;migratetolowerlaborcostcountrieswithinhomeregion

    Startupcarrierswillcontinuetoseektotalsupportsolutions

  • ICFInternational|icfi.com ICF International 2015

    EngineOEMshavethestrongestandmostmaturepositionacrosstheprimaryMROsegments

    MROFORECAST

    55%

    35%

    20%

    25%

    44%

    82%

    25%40%

    54%

    18%

    0%

    10%

    20%

    30%

    40%

    50%

    60%

    70%

    80%

    90%

    100%

    Engine Component Airframe Linemaintenance

    Non-OEMMRO

    Airline in-house

    OEM

    Source:ICFAnalysis

    AirTransportMROSupplierMarketShare

    ICFInsight

    OEMleverageisstrongestinthemorematerialintensivemarkets

    ComponentOEMsarecatchinguptothedominantengineOEMs

    AircraftOEMshaveanalmostnonexistentpositionintheairframerelatedaftermarket

  • ICFInternational|icfi.com ICF International 2015 9

    ICFbelievestherearethreekeybattlegroundsthatwillshapethefutureoftheMROaftermarket

    MROFORECAST

    Criticaltosuccessinreliabilityandproductdesignimprovement(andmarketparticipationingeneral)

    Whocontrolstheoperationaldata?

    Criticaltosuccessindrivingmaterialchoice,lifecyclecost,andMROmargins

    Whocontrolstheworkscope?

    Criticaltosuccessingrowingintegratedsolutionservicesmarket

    WhocontrolstheAssets?

    1

    2

    3

    Source:ICFAnalysis

  • ICFInternational|icfi.com ICF International 2015

    Theroleoftraditionalaviationstakeholdersinthedatavaluechain isstilltobedetermined

    MROFORECAST

    Inventory Management

    Inventory Management

    Airport TerminalAirport TerminalAirline

    Operations CenterAirline

    Operations CenterPassengersPassengers

    AircraftAircraft

    RegulatorsRegulatorsMRO & OEMMRO & OEM

    Source:ICFAnalysis

  • ICFInternational|icfi.com ICF International 2015 11

    andakeychallengeforaviationstakeholdersishowbesttorealizevalue fromthedisparateterabytesofdata

    MROFORECAST

    Source:ICFAnalysis

    NumberofAHMParameters

    767:10,000

    A320:15,000

    787:100,000

    777 787

    ~ 28MB

    < 1MB

    TransmittableData(MB/Flt)

    AircraftDataGeneration(TB/Year)

    2012 2022

    ~ 137TB

    ~11TB

    ~1,100% increase

  • 12icfi.com/aviation |

    TodaysAgenda

    MROForecast

    MeettheFrackers!

    Thenotsomightymighty BRICHouse

  • 13icfi.com/aviation |

    U.S.crudeoilandnaturalgasproductionhavesoaredinrecentyears

    MEETTHEFRACKERS!

    3,500

    4,500

    5,500

    6,500

    7,500

    8,500

    9,500

    1,250

    1,450

    1,650

    1,850

    2,050

    2,250

    2,450

    Source:EIA,ICFAnalysis

    10yeargrowth=71%(5.5%CAGR)

    10yeargrowth=47%(3.96%CAGR)

    Thousands

    U.S.CrudeOilProduction(Barrels/day)

    U.S.NaturalGasProduction(Monthlymarketedproduction)

    Billioncu.ft.

    Breakthroughtechnologiesinhorizontaldrillingandhydraulicfracturing(akafracking)resultedinaUSledenergyrevolution

  • 14icfi.com/aviation |

    makingtheU.S.aglobalpowerhouseinenergyproductionMEETTHEFRACKERS!

    728

    579

    177 173 162135

    109 108 83 73

    0

    100

    200

    300

    400

    500

    600

    700

    800

    Source:BPStatisticalReviewofWorldEnergyJune2015,ICFAnalysis

    11.6 11.510.8

    4.3 4.23.7 3.6 3.3 3.1 2.8

    0

    2

    4

    6

    8

    10

    12

    14

    GlobalOilProduction(MillionBarrelsperDayasofJune2015)

    GlobalNaturalGasProduction(BillionsofCubicMetersasofJune2015)

    TheUSenergyrevolutionhasdisruptedtheglobaleconomicandgeopoliticalbalanceofpower

  • ICFInternational|icfi.com ICF International 2015

    Source:Economist,EIA,ICFAnalysis

    BrentCrudeOilPrice,$perbarrel

    $40

    $60

    $80

    $100

    $120

    $140

    $160 VenezuelaIran

    NigeriaEcuadorIraqLibya

    SaudiArabia

    AngolaUAE

    Qatar

    Russia

    Deficit

    Surplus

    NationalGovernmentFiscalBudgetsBreakEvenOilPrice(2014)

    BrentCrudeOilPrice,USD$perbarrel

    Lowoilpricesareexertingtremendousstressoneconomiesdependentonenergyexports

    MEETTHEFRACKERS!

    Thepotential forsustainedreduction inoilrevenuescouldfurtherdestabilizemanyalreadyfragileeconomies

  • 16icfi.com/aviation |

    MEETTHEFRACKERS!

    Aviationfuelcostshavedroppedover45%duringthepast12months

    $1.4

    $1.6

    $1.8

    $2.0

    $2.2

    $2.4

    $2.6

    $2.8

    $3.0

    U.S.GulfCoastJetFuelPriceperGallon

    Source:EIA,ICFAnalysis

    $ USD

    Shouldtheselowfuelcostscontinue,therewillberepercussionsthroughouttheaviation&MROsupplychain

    ~45%

  • 17icfi.com/aviation |

    $30

    $20

    $10

    $0

    $10

    $20

    $30

    Withupto40%ofanairlinesoperatingcostsdrivenbyfuel,theairlineindustryhassuccessfullyreturnedtoprofitability

    MEETTHEFRACKERS!

    GlobalAirlineProfitability

    Source: IATACentralForecastJun2015,ICFAnalysis

    $USDBillions $29B

    NorthAmerica$16B

    RestofWorld$13B

    However,recentairlineprofitwindfallsarenotaglobalphenomena;morethanhalftheprofitsareenjoyedbyNorthAmericanCarriers

  • 18icfi.com/aviation |

    MEETTHEFRACKERS!

    Currentindustryforecastsarebasedon$65/bbl giventodaysprice,tremendousshorttermupsideexists

    $(40)

    $(20)

    $

    $20

    $40

    $60

    $80

    $100

    $120

    $30 $35 $40 $45 $50 $55 $60 $65 $70 $75 $80 $85 $90

    Arli

    ne In

    dust

    ry P

    rofit

    ($B

    illio

    ns)

    Crude Oil Cost per Barrel

    2015IATAForecast:$29Bindustryprofitbasedon$65/bbl

    Cautio