As independent MROs position their businesses for the future, adding capabilities or capacity could be done more cautiously than pre-pandemic.
“The pandemic has taught us yet again that cash is king and cash flow is critical to the survivability of these periods,” said Fraser Currie, Joramco’s CCO during an Aviation Week BEER panel.
To invest in “major capabilities or new hangars you have to go into it more sure footed than you did before. We all thought our business plans were pretty foolproof before [the pandemic], but we’ve had to put another level onto that,” he said.
Sercan Toper, a senior VP at Turkish Technic, agreed and said “the amount of capex needed for MRO is big,” despite that it can be a low-margin business. That requirement will prompt MROs to form more joint ventures in the near future, especially with OEMs to gain new capabilities, he said.
Currie thinks independent MROs could form alliances for new facilities or capabilities—especially if an alliance provides a common documentation interface and streamlined customer service, which would make it easier for airlines than dealing with two completely separate MROs. “If you can bring two [MROs] together but maintain corporate governance of known competitive activity, I think airlines will start to look to come to a group—whether a formal JV or an alliance,” he said.
Joramco adjusted its business model at the peak of the pandemic to bring on aircraft lease transition work, which “we normally wouldn’t do because the facility would be full of heavy checks,” Currie said.
It also added aircraft storage services for airlines and accelerated next-gen aircraft capabilities to accommodate expected higher volumes of newer aircraft types. In fact, “we’re looking at a very strong line of [Boeing 737] MAXs coming through the business” soon, he said.
Panelists cautioned that the aviation industry should not wait to return to “normal.” “I think we’re already in the new norm. If we’re waiting for a siren to sound that the pandemic is over, my own view is forget it. We’re in it now. This is what it looks like. It might get better, it might get worse,” Currie said.
Tight cost controls are expected to continue for the near future. “Everybody is looking for a deal and I don’t see that changing,” said Richard Martson, MAAS Aviation’s director of customer service, marketing & sales for Europe, the Middle East and Africa.
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