NAVIGATINGTHROUGH THE UNPREDICTABLE - cavok. ... 2014/09/19 ¢ ...

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  • ©TeamSAI

    NAVIGATING THROUGH THE UNPREDICTABLE

    UNCERTAINTY AND RISK . . .

    2014–2024 GLOBAL MRO FORECAST MRO EUROPE CONFERENCE

    OCTOBER 2014

    10/07/2014

  • ©TeamSAI

    NAVIGATING THROUGH THE UNPREDICTABLE

    A LOOK BACK

    210/07/2014

  • ©TeamSAI 3

    IN 2004, TEAMSAI PREDICTED MRO IN 2014 WOULD EXCEED $56B

    10/07/2014

    $42.7

    $56.5

    2004 2014 2004 Forecast 2014 Forecast

    BUT WOULD ANYONE SAY IT HAS BEEN AN EASY DECADE? Note: All values in 2014 $US

    Total Jet Aircraft MRO Forecast (2014 $USB)

    $54.7

    2014 2024

    $83.3

  • ©TeamSAI

    -5.0%

    -4.0%

    -3.0%

    -2.0%

    -1.0%

    0.0%

    1.0%

    2.0%

    3.0%

    4.0%

    5.0% Historical and Forecast GDP Growth in the EU

    4

    THINGS MAY BE CALMING DOWN IN THE EU

    10/07/2014

    AFTER A TUMULTUOUS FEW YEARS, EUROPE SEEMS POISED FOR GROWTH

    Source: IMF World Economic Outlook, 4/2014

  • ©TeamSAI 5

    BUT DIFFERENT REGIONS TELL DIFFERENT STORIES

    10/07/2014

    BUT PEELING BACK THE EU CURTAIN SUGGESTS GROWTH IN SOME REGIONS COMES WITH RISKS

    Source: IMF World Economic Outlook, 4/2014, UN country groupings

  • ©TeamSAI

    Region Issue Risks Eastern Europe

    Strong growth in recent years but now subject to serious concerns

    • Tension between Russia and Ukraine

    • Soft energy prices in Europe contribute to the East’s economic weakness

    • Geo- Political risk

    Southern Europe

    Moderate growth in countries still struggling with austerity

    • Debt levels remain high • Weak consumer market

    • Credit / Forecast risk

    Northern Europe

    Strong growth forecast

    • Relatively calm countries but volatile results

    • Forecast risk

    Western Europe

    Moderate growth in most countries

    • Largest basket but history has shown these countries too can be volatile in terms of GDP growth

    • Forecast risk

    Europe Implementation of sanctions on Russia

    • Across all regions, sanctions could hinder fragile recovery

    • Geo- Political risk

    6

    RISKS SPEFIC TO EU REGIONS

    10/07/2014

  • ©TeamSAI

    WHAT DOES IT MEAN FOR MRO PLANNING?

    10/07/2014

    MRO PLANNING

    risks and uncertainty abound…

    Forecast Uncertainties

    MRO Uncertainties

    Geo- Political Risks

    Natural Disaster Risks

  • ©TeamSAI 8

    DON’T GET COMPLACENT…GEO-POLITICAL RISKS CONTINUE

    10/07/2014

    slowdown in China

    • Chinese economic growth accounts for 24% of net global growth

    G EO

    -P O

    LI TI

    C A

    L

    currency fluctuations

    • Threatens airlines in emerging markets such as India and Indonesia

    • Ticket prices • Ability to purchase oil and parts

    short term

    short to medium

    term

    China as a share of net economic growth ¼Ticket pricesUS$-denominated oilNon-local spare parts ▲

    ?

    emerging market currency fluctuations

    slowdown in China

  • ©TeamSAI 9

    DON’T GET COMPLACENT…MRO RISKS ABOUND M

    R O

  • ©TeamSAI

    NAVIGATING THROUGH THE UNPREDICTABLE

    FLEET AND MRO OUTLOOK

    1010/07/2014

  • ©TeamSAI

    year-by-year fleet forecast

    year-by-year MRO forecast

    improved airframe modifications model

    improved component MRO model

    improved line maintenance model

    implemented engine shop visit model and improved interval driver methodology

    improved labor/material differentiation across all models

    11

    MODEL ENHANCEMENTS FOR 2014

    10/07/2014

  • ©TeamSAI 12

    GLOBAL FLEET OUTLOOK - COMMERCIAL AIRLINE SECTOR

    10/07/2014

    2014-2024 Growth

    Rate

    2024 Market Share

    0.8% 24%

    2.1% 18%

    4.4% 17%

    7.3% 12%

    5.1% 8%

    5.6% 6%

    5.8% 6%

    5.1% 5%

    11.4% 3%

  • ©TeamSAI 13

    GLOBALLY, THE MRO GROWTH OUTLOOK IS HEALTHY

    10/07/2014

    $58B- $87B

    Global Market Size

    +4.2% CAGR

    2014-2024

    Airframe 4.1% 20% Engine 4.1% 38% Component 4.4% 22% Line 4.1% 20%

    CAGR % SHARE

  • ©TeamSAI 14

    MRO REGIONAL MARKET SHARES CHANGE DRAMATICALLY BY 2024

    10/07/2014

    ME/Africa • ME will double by 2024, driving majority of growth

    Asia • Asia will be the largest MRO market by 2024

    Americas • Large-scale fleet replacement in NA translates to flat MRO

    • LA&C market drives growth

    Europe • EU to have moderate MRO growth, at 2.9%

    Europe

    Americas

    Asia

    ME/Africa

  • ©TeamSAI 15

    EUROPEAN FLEET GROWTH WILL BE SOLID

    10/07/2014

    pax traffic 2014F (IATA) ▲ 4.7% RPK

    current fleet 2014 (Ascend Online) 5,950

    fleet CAGR 2014-24 (TeamSAI) +2.9% deliveries 2014-24 (TeamSAI) 3,700+

    retirements 2014-24 (TeamSAI) 1,700+

    RJ ▼

    2014-2024 CAGR

    2.9%

    1.3%

    -0.5%

    3.3%

    3.7%

    WE EE EU Growth 1,104 872 1,976 Replacement 1,591 138 1,729

  • ©TeamSAI 16

    EUROPEAN MRO OUTLOOK

    10/07/2014

    $16B- $22B

    EU Market Size

    +2.9% CAGR

    2014-2024

    Airframe 2.0% 23% Engine 3.1% 33% Component 3.5% 20% Line 3.0% 24%

    CAGR % SHARE

  • ©TeamSAI 17

    EUROPEAN MRO BY VINTAGE & MODEL TYPE

    10/07/2014

    Consider Impact to MRO

    less-mx-intensive HMV ▼ engine MRO honeymoon ▼ component MRO honeymoon ▼ 1970s + 1980s share ▼ 1990s, 2000s, 2010s share ▲

    Europe’s Top 10 Aircraft Families in terms of MRO Spend 2014 2024

    1 A320 CEO & NEO 29% A320 CEO & NEO 29% 2 737 NG & MAX 14% 737 NG & MAX 21% 3 747-400 10% 777 8% 4 777 9% A350 7% 5 A330 7% A330 6% 6 A340 7% 787 4% 7 737 Classics 6% A340 4% 8 767 3% 747-8 3% 9 757 3% A380 2%

    10 Embraer 170/175/190/195 & E2 2% 747-400 2%

  • ©TeamSAI

    NAVIGATING THROUGH THE UNPREDICTABLE

    DEALING WITH UNCERTAINTY AND RISK

    1810/07/2014

  • ©TeamSAI 19

    RISKS AND UNCERTAINTIES IN FLEET AND MRO FORECAST

    10/07/2014

    HIGH: higher deliveries/lower retirements moderate interest rates stable economic growth in emerging regions moderate oil prices

    lower deliveries/higher retirements higher interest rates

    LOW: low economic growth

  • ©TeamSAI

    BENEFITS

    20

    POSITIONING THE BUSINESS EFFECTIVELY

    10/07/2014

    Methods to Achieve

    strong balance sheet

    good bottom line

    distinctive reputation

    effective scenario/ contingency planning

    customer focus

    broad vision

    excellent execution

    financial discipline

    Le ad

    in g

    Q ua

    lit ie

    s EXCELLENCEEXCELLENCE

    PROFITABILITYPROFITABILITY

    ▼SURVIVABILITY ▲VERSATILITY

    ▼SURVIVABILITY ▲VERSATILITY

    PREPAREDNESSPREPAREDNESS

  • ©TeamSAI

    Deliver……..Deliver……..

    Define ……..Define ……..

    Analyze……..Analyze……..

    21

    MROS MUST ANALYZE, DEFINE, AND DELIVER VALUE TO CUSTOMERS

    10/07/2014

    know your market know your market

    know your proposition know your proposition

    know your customer know your customer

    compelling presentation

    execution

    clear business case

    pricing

    clear strategy, positioning

    market attractiveness

    competitor analysis

    market potential

  • ©TeamSAI

    NAVIGATING THROUGH THE UNPREDICTABLE

    THANK YOU

    2210/07/2014

    Dave Marcontell President & COO TeamSAI, Inc. (404) 334-8040 dmarcontell@teamsai.com

    WWW.TEAMSAI.COM