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What do you see as the key drivers and timing for the upslope of the maintenance, repair and overhaul (MRO) supply chain?
Aviation Week Air Transport and Safety Editor Sean Broderick responds:
One word: activity. Aircraft that are moving need maintenance. The Chinese market’s steady climb and indications that China’s government is eyeing the addition of more international flights (which have been severely limited compared to domestic activity, to help keep the novel coronavirus at bay) are positive signs. Word that U.S. carriers are steadily ramping back up adds more hope.
On its recent earnings call, executives at parts manufacturing authority, or OEM parts alternative, specialist Heico said that May seemed to be the bottom of the market for its business. Parts distributors typically get orders for delivery within a month, so this lines up with the global passenger market’s low point being in April. By late May, June orders were starting to come in, suggesting that airlines had used up any excess inventory (one of the first cash-preserving moves carriers make when times get lean) and were anticipating near-term need for parts.
How quickly will the entire MRO market recover? About as quickly as airline activity. A surge in spare parts and entire assemblies (such as engines) from parked aircraft will cut into revenues some, but the general track of everything from parts sales to heavy overhauls will follow available seat miles and general airline activity.
Will it take two years to get back to 2018 (pre-Boeing 737 MAX grounding) levels? Four years? More? The estimates are all over the place, which underscores the one thing everyone can agree on: Nobody knows what the future holds.
