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Oliver Wyman's Aviation, Aerospace & Defense practie released its annual analysis of leading economic and business indicators in conjunction with the February 2 Raymond James Airline Conference. In the 37 page report, select US carriers are reviewed across a variety of different cost and revenue metrics. This year, further analysis on margin implications was also conducted.
Oliver Wyman recently surveyed over 120 airline, airline MRO, independent MRO, and OEM executives to gauge their views of the aviation MRO market. In our global respondent pool, over 74% held Director or higher titles in their organizations.
As economies continue to recover, the maintenance, repair, and overhaul (MRO) industry is stabilizing - though still facing challenges. MROs are operating today against a backdrop of uncertainty in jet fuel prices and the effect fuel price fluctuations could have on aircraft utilization and the active fleet. But against this backdrop, signs of renewed health have appeared on the horizon. Examples include rising capacity utilization and an easing up of headcount reductions in MRO workforces.
Each year Oliver Wyman prepares an Airline Economic Analysis which is released at the Raymond James Global Airline Conference. In the report, select carriers are reviewed across a variety of different metrics including:
Read the 33 page report >
Also PlaneStats.com created the Airline Performance Comparisons tool to dynamically view statistics of specific carriers including passenger yield, passenger load factor, RASM and CASM data for the current period. Click the icon to the right to start the comparison.
Operators and owners face a difficult question as a variety of alternative approaches for fleet refreshes become available. These may include existing aircraft, OEMs contemplated re-engined alternatives, and/or newly designed aircraft.
On the surface, making a decision about migrating to a re-engined, new-build aircraft may seem like any fleet strategy decision, but it is much more complex. For example, looking back to existing fuel burn or maintenance cost history isn't definitive, so understanding the possible ranges and probabilities of performance and costs parameters becomes increasingly important to determine if the rewards outweigh the inherent risks to such a complex decision.
Jet fuel prices are less volatile today than they were in 2008; but, airlines should not be lulled into a false sense of security. What airlines are experiencing now is the quiet before another storm. Large fuel price swings will return. The only question is when and which airlines will emerge form the turbulence in the strongest postion.
As airlines recover from the latest economic downturn, the maintenance, repair, and overhal (MRO) industry is slowly starting to show signs of a pending uptick. Many airline customers are forecasting growth later in the year. However, a new competitive arena is developing, and providers will need to rethink their service offerings if they are to compete with market-leading "Mega-MROs".
The maintenance organization must balance airline operational goals with maintenance cost control/reduction, all while maintaining the highest standards of safety and quality. In additon, constantly changing economic and regulatory conditions affect the business, operational, and ultimately, resource requirements of the maintenance organization. These constant change necessitate a strong organization design strategy -- one that uses a methodical, flexible, fact-based, and repeatable approach to determining appropriate organizational requirements.
Manufacturers are shutting down production of 50-seat jets in the face of empty order books and changing economics. What are the options for operators with low-volume routes to serve and aging fleets to replace? A solution is necessary, and the industry must work together to find it.
Three changes impacting growth airlines stand out. First, the CASM gap between Value and Network carriers is narrowing. Second, CASM ex-fuel is increasing. Finally, cost leadership amongst value carriers is changing.
Different Measures of Success for Airlines and Airports, Market Trends, The New Risk Profile & When Will Traffic Return?
As North American airlines struggle to boost liquidity, one promising souce of cash is tapping the component pool, either through an inventory sale-leaseback or through rotable/repairable pooling. European carriers have a broader experience in component pooling, from which North American carriers can learn and create substantial value.
In the current economic environment, there is little growth even among growth airlines. However, those airlines still have different costs and other characteristics than traditional network carriers.
Maintenance, repair, and overhaul (MRO) suppliers have been squeezed to unsustainably low levels of profitability. In the long run, that hurts everyone, including airlines. Part of the problem is the dominant outsourcing model of aggressive, price-focused contracts. A shift to true partnerships will lead to renewed investment and a focus on improving performance, not just cutting costs.
Component maintenance can account for up to one-fifth of total maintenance costs for an airline, yet many airlines still purchase component repair services inefficiently on a part-by-part basis. This white paper details a more effictive approach for airline executives, one that leverages supplier capabilites and thereby reduces costs and risk while also improving performance and reliability.
The current economic slump has motivated airlines to reach for their cost-cuting knives. But what about the stream of revenue leaking from their Revenue Pipelines?
Private equity investors are showing strong interest in the aviation maintenance, repair, and overhaul (MRO) market. But before the deals get sealed, both sides should be more systematic in mapping out strategies for success. This commentary discusses four specific strategies private equity investors may leverage in this industry.
