TURBULENCE AHEAD DISENGAGE THE AUTOPILOT ... 2015/10/25 ¢  Global MRO Market Share...

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Transcript of TURBULENCE AHEAD DISENGAGE THE AUTOPILOT ... 2015/10/25 ¢  Global MRO Market Share...

  • © Oliver Wyman AVIATION

    Christopher Doan Vice President

    TUESDAY, NOVEMBER 3, 2015

    TURBULENCE AHEAD DISENGAGE THE AUTOPILOT 2015-2025 GLOBAL FLEET & MRO MARKET FORECAST

  • 1© Oliver Wyman

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

    The respected TeamSAI Global Fleet & MRO Market Forecast, and related betterinsight™ market intelligence data, remains available at www.planestats.com/betterinsight

    ~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

  • Global Fleet & MRO Market Outlook

  • 3© Oliver Wyman

    13,124 16,949

    21,089

    4,686

    5,753

    7,181

    3,396

    3,222

    2,906

    2,721

    3,079

    3,232

    23,927

    29,003

    34,408

    5.2%

    4.2% -1.0% 2.5%

    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 '15-'20 CAGRS

    2020 '20-'25 CAGRS

    2025

    Narrowbody Widebody Regional Jet Turboprop

    • 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

    Key Fleet Forecast Growth Rates

    2015-2025 Global Fleet Forecast by Aircraft Class

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

    N um

    be r o

    f A irc

    ra ft

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

    3.9%

    3.5%

  • 4© Oliver Wyman

    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

    2015 Fleet Size

    722North 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

    10YR CAGR

    2015- 2025 Absolute Growth

    2,204

    7,420

    6,452

  • 5© Oliver Wyman

    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© Oliver Wyman

    New Cargo Deliveries

    423

    New Passenger Deliveries

    18,068

    664

    Cargo Retirements

    7,346

    Passenger Retirements

    Passenger Fleet

    716

    P2F Conversions Cargo Fleet

    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

  • 7© Oliver Wyman

    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

    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

  • 8© Oliver Wyman

    2025 Global Air Transport Fleet by Vintage

    2015 Global Air Transport Fleet by Vintage

    The significant move towards late generation aircraft, in addition to improving airline costs, will undoubtedly impact MRO dynamics

    The result is a staggering change in fleet mix by 2025

    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© Oliver Wyman

    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

    Airframe Engine Component Line

    $14.5 $15.9 $16.7

    $27.9 $37.1

    $46.8 $12.4

    $15.2 $19.2

    $12.3

    $15.0

    $17.8

    $67.1

    $83.2

    $100.4

    1.9%

    5.9%

    4.1%

    4.0%

    1.0%

    4.8%

    4.7%

    3.5%

    $0

    $20

    $40

    $60

    $80

    $100

    $120

    2015 '15-'20 CAGRS

    2020 '20-'25 CAGRS

    2025

    Airframe Engine Component Line

    Global MRO Market Share Forecast by MRO Segment

    Global MRO Market Size Forecast by MRO Segment

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

    20 15

    D ol

    la rs

    ($ U

    SB )

    M ar

    ke t S

    ha re

    Airframe Heavy Maintenance costs improve with the new technology while both Engine and Component sectors will take a larger share

    4.4%

    3.8%

  • 10© Oliver Wyman

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

    Asia/Pacific, China, & India will be challenged to build the necessary infrastructure capable of handling the volume of MRO the combined region will demand

    2015 MRO Spend ($USB)

    $1.3North 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

    $7.0

    $3.3

    $5.3

    $16.5

    10YR CAGR

    2015- 2025 Absolute Growth ($USB)

    $7.5

    $18.3

    $20.0

  • 11© Oliver Wyman

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

    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

  • Asian Fleet & MRO Market Outlook

  • 13© Oliver Wyman

    Passenger traffic is soaring in Asia, outpacing fleet growth by 3.0%. Still, the young fleet is growing very quickly

    2015 PASSENGER TRAFFIC (RPK) GROWTH

    9.1% 2015 CURRENT FLEET

    6,452

    6,500+ 2015-2025 AIRCRAFT DELIVERIES

    1,300+ 2015-2025 AIRCRAFT RETIREMENTS

    +6.1% 2015-2025

    FLEET CAGR

  • 14© Oliver Wyman

    Top 10 Asia Aircraft Families - 2025Top 10 Asia Aircraft Families - 2015

    In 10 years, over 56% of Asia’s fleet will be new technology aircraft requiring new technical skills and capabilities

    A320C/NEO

    737NG/MAX

    777

    747

    A330

    A340

    737CL

    A380

    767

    ATR

    A320C/NEO

    737NG/MAX

    777

    A330

    787

    A350

    747

    C919

    A380

    ATR

  • 15© Oliver Wyman

    $0.50

    $1.00

    $1.50

    $2.00

    $2.50

    $3.00

    2,000 2,800 3,600 4,400 $0.00

    $0.50

    $1.00

    $1.50

    $2.00

    $2.50

    $3.00

    $3.50

    2014 2015 WTI Brent Jet A

    Aircraft Profitability Curve Current Generation vs New Generation

    Crude Oil Spot Price per Gallon

    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.

    20 15

    U S

    D ol

    la rs

    ($ U

    SD )

    20 15

    U S

    D ol

    la rs

    ($ U

    SD )

    Flight Hours

    Our view: Long term, oil prices will likely recover, OEM order books will remain largely unaffected, and net fleet growth will progress as forecasted

    AUG 2014

    AUG 2015

    1 YEAR PRICE DROP

    New gen aircraft are more profitable than current gen

    New gen aircraft are less profitable than current gen

  • 16© Oliver Wyman

    $18.3 $19.9 $22.3 $2