Air Transport World

Maintaining the status quo: North American carriers eschew restructuring their MRO activities as they seek answers to cost and revenue challenges. (M & E).(maintenance, repair and overhaul services)

The post-9/11 aviation downturn has led to a dramatic reduction in demand for maintenance, repair and overhaul services by the world's airlines. Ann Arbor, Mich.-based consultancy Aero-Strategy estimates that the annual value of the MRO market for aircraft of more than 50 seats shrank by $2.5 billion between 2000 and 2002 to a total of $34 billion (ATW 11/02, p.60).

Moreover, the impact is likely to be felt for many more years, according to the firm, which recently forecast that spending on engine overhauls alone will be reduced by around $20 billion through 2010 versus pre-downturn expectations owing to a combination to slower-than-anticipated traffic growth and aircraft retirements.

Much of that contraction will take place in North America, where 40% of engine overhaul spending is generated and where airlines have been hardest hit by the crisis. US carriers have parked hundreds of aircraft and substantially cut back flying others. Additionally, carriers are stripping low-time engines, parts and components off aircraft that are going into storage, effectively creating new spares inventories out of whole cloth. In some instances, it actually is cheaper to acquire a half-time engine on the secondhand market than to pay for an overhaul, analysts tell ATW.

As a result, some airlines have closed MRO facilities and furloughed workers. In one of the largest such actions, Northwest Airlines shuttered its Atlanta DC-9 engine and airframe facility last October, impacting some 1,450 employees. In the same month, United said it would close one of three 757 lines at its Indianapolis maintenance complex and furlough 250 mechanics, while another 160 were let go owing to schedule reductions. In November, US Airways closed a heavy maintenance hangar in Tampa with resultant job losses.

Yet by-and-large, MRO base closings have been relatively rare. …

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