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Aviation News The MRO market revenue could fall by 60% in 2020

The MRO market revenue could fall by 60% in 2020

Emilie Drab
18 JUN 2020 | 292 words
The MRO market revenue could fall by 60% in 2020
Le Journal de l'Aviation - All rights reserved
According to consulting firm AlixPartners, the Maintenance Repair and Overhaul (MRO) sector could be affected by the current crisis in an amplified way compared to air transport. It emerges from its analysis that the MRO market could fall by 60% to 65% in revenue compared to 2019, reaching only between USD 27-32 billion in 2020 (on a basis of USD 77 billion in 2019).

Since maintenance revenues are logically closely linked to traffic, this inevitably brings the after-market sector with it when it collapses. But an aggravating phenomenon is added: the urgency for the airlines being to preserve their liquidities and to limit their expenses as much as possible, they, for the overwhelming majority of them, also postponed the heavy operations which were planned, this which will amplify the loss of income.

Line maintenance, component maintenance, heavy maintenance ... all segments will be strongly affected, but the hardest blow will be dealt to major overhauls on engines and cabin refitting project, which could lose between 65% and 70% of their revenues over the year.

The reduction of fleets, with the accelerated withdrawal of hundreds of aircraft and the storage of others over long periods, will increase the availability of engines and spare parts for example. There could thus be "a significant cannibalization effect," says Pascal Fabre, Aerospace & Defense expert, with a strong impact on sales of new parts and the timing of major overhauls. Likewise, cabin modernisation is not essential for flight safety, and those projects risk being postponed.

In the short term, AlixPartners believes that all these effects will considerably worsen overcapacity in the MRO sector and force its players to quickly adjust their workforce. In the medium term, he expects recovery and even bankruptcies and an accelerated consolidation of the sector.
Emilie Drab
Assistant editor
Civil aerospace, Air transport


 
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