Widebodies are a small portion of the global fleet count but, due to scale, they generate a much larger portion of MRO demand. The lag in recovery of some widebody routes is being offset by a lag in delivery of replacement widebodies, helping to restore health to widebody MRO.
Global widebody capacity will probably not recover to pre-pandemic levels until “the back end of 2024,” predicts Mike Yeomans, director of valuations and consulting at IBA. Widebody operations are recovering now, but slowly, and there are also headwinds facing the return to normal levels.
Globally, widebody available seat kilometers were up to 80% of 2019 levels in November, IBA reports. Some routes—like Latin America’s international operations, trans-Atlantic flying, Europe-to-Middle East and Middle East-to-Asia flying—are strong now, but Chinese lockdowns and restrictions on international flights are the big drag on the global widebody passenger market.
Yeomans estimates total Asia-Pacific widebody capacity in November was 48%, below half of pre-COVID levels. However, excluding China, that rate would be 73% of pre-COVID operations, “So there is a big difference,” Yeomans notes.
But even as the rest of the world has eased restrictions, headwinds are slowing the recovery, including: oil prices and a larger spread between oil and jet fuel costs; higher inflation and interest rates, which are slowing U.S. and European economies; and war in Eastern Europe.
Inflation is driving up maintenance costs on widebodies. Yeomans reports engine life-limited part prices have gone up 10% and, in several cases, 12%. This might reduce the economic life of some aircraft types, such as the Airbus A380 and Boeing 777.
Cargo conversions have been a boon to both widebody lifespans and MRO shops. Yeoman predicts that the dwindling feedstock of 767s will shift significant conversion demand to Airbus A330-300s powered by Rolls-Royce engines, as these are in plentiful supply.
The big piece of good news for widebody MRO is that the shift to new widebodies stalled during the pandemic, with much slower delivery of new widebodies. Plenty of parked widebody capacity and supply chain problems have kept deliveries low. For example, Airbus is now producing five A350s per month, versus 11 per month in 2019. That means more aircraft to repair rather than simply accept into service, at least for a while.
The delay in new widebody delivery is helping at least one major global MRO. Marcus Motschenbacher, vice president and chief commercial officer for aircraft maintenance services at Lufthansa Technik (LHT), says widebody demand is now higher than it was pre-pandemic, since many operators must continue to operate parts of their fleets that they thought would be replaced by now. “Due to massive delays from the aircraft manufacturers, these old aircraft now need slots with significant downtimes,” Motschenbacher says.
The planned reactivation of at least some of Lufthansa’s 14 A380s is only one example of this. Motschenbacher says there is increasing demand for all kinds of widebodies. Primary demand is for A380s, but there is also demand for A340s. Many more Boeing 767s—which were supposed to be replaced by now-delayed 787s—will also need to be operated.
Motschenbacher says LHT tries to keep widebody work scopes at a minimum, but regular C checks often turn into heavier events once started. Modifications are less frequently requested, as airlines are minimizing investment in soon-to-be-retired aircraft. Checks tend to aim just at clearing the next C check.
Motschenbacher expects the widebody MRO market to strengthen further in 2023. “Political tensions between the U.S. and China play an important role here,” he says. Almost half of U.S. widebodies have received heavy maintenance in China. Many U.S. operators are now trying to find solutions outside China or are even bringing maintenance back in-house.
In any case, all hangars and slots across LHT’s facilities are now filled. “We see this continuing for at least the next 3-4 years,” Motschenbacher says.
Motschenbacher says MRO has turned into a complex and fragile system. Both widebody and narrowbody maintenance will continue to face staff challenges. Tooling for newer aircraft types, such as the 787, A350, A320neo and 737 MAX, have longer lead times and significantly increased costs. Material deliveries and the ability of OEMs to provide timely responses to engineering queries are also problems.
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