Air Transport World

Trying to hold on: MRO providers scramble to survive the downturn as they respond to long-term changes in the business. (M & E).(maintenance, repair and overhaul services )

The downturn in commercial aviation has accelerated a restructuring that already was underway in the maintenance, repair and overhaul services after-market, hastening an unavoidable shakeout and consolidation among the participants. Faced with a shrinking MRO pie in 2002-03, facilities are scrambling for business, slashing prices just to keep bays filled and workers busy. Inevitably, the bigger shops and those with deep pockets to ride out the recession will get stronger and the smaller players will need to find secure niches or partnerships.

Concurrently, the high costs associated with servicing modern engines, components and composite structures, coupled with the fact that new-generation aircraft require less attention overall than earlier models, have created an environment in which depth of financial resources and economies of scale have become key.

Outsourcing by many airlines will continue and perhaps even gain momentum as they seek to cut costs, first as a matter of survival and then as part of a strategy to focus on their core competencies. With the exception of a relative handful of full service-airline MROs, most that choose to stay active in the aftermarket will specialize in specific systems or fleet types. That's the consensus among experts with whom ATW spoke.

At present, the biggest challenge is coping with the dramatic contraction since 9/11. According to a forecast by Ann Arbor, Mich.-based AeroStrategy/Spectral Group, the value of the MRO market for aircraft of more than 50 seats has declined by more than $2.5 billion since 2000 and will total $34 billion this year. A separate forecast by Back Aviation Solutions/Strand Associates estimates that the MRO market shrank by $4.4 billion between 2001 and 2002 and currently is worth some $37.8 billion.

Significant differences emerge, however, among the five major categories of activity: Heavy airframe, line maintenance, engines, components and modifications and the various subgroups within them. According to SH&E Director-Safety and Technical Services Peter White, the blow has fallen hardest on those shops specializing in old equipment. …

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