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TRANSCRIPT
©TeamSAI
NAVIGATING THROUGH THE UNPREDICTABLE
UNCERTAINTY AND RISK . . .
2014–2024 GLOBAL MRO FORECAST
MRO AMERICA CONFERENCE
APRIL 2014
04/08/2014
©TeamSAI
NAVIGATING THROUGH THE UNPREDICTABLE
A LOOK BACK
2 04/08/2014
©TeamSAI 3
IN 2004, TEAMSAI PREDICTED MRO IN 2014 WOULD EXCEED $56B
04/08/2014
$42.7
$56.5
2004 2014
2004 Forecast 2003 Forecast
2004 2009 2014
16,030 21,042 25,586
2,873,863 3,691,000 4,491,000
$11.6 $13.1 $14.5
$10.1 $12.2 $14.7
$6.9 $7.4 $8.9
$8.5 $9.1 $10.9
$37.0 $41.8 $49.1
2004 Forecast 2014 Forecast
BUT WOULD ANYONE SAY IT HAS BEEN AN EASY DECADE?
Note: All values in 2014 $US
.
Total Jet Aircraft MRO Forecast (2014 $USB)
$54.7
2014 2024
$83.3
©TeamSAI 4
RPM HISTORY COMPARED TO AIRLINE PROFITABILITY (1989-2013)
04/08/2014
Gulf War
9/11
SARS
Global Financial Crisis
©TeamSAI
WHAT DOES IT MEAN FOR MRO PLANNING?
04/08/2014
MROPLANNING
risks and uncertainty abound…
Forecast
Uncertainties
MRO
Uncertainties
Geo-
Political
Risks
Natural
Disaster
Risks
©TeamSAI 6
DON’T GET COMPLACENT…GEO-POLITICAL RISKS CONTINUE
04/08/2014
slowdown in
China • Chinese economic growth accounts for 24% of net global
growth
GE
O-P
OL
ITIC
AL
currency
fluctuations
• Threatens airlines in emerging markets such as India and Indonesia
• Ticket prices
• Ability to purchase oil and parts
short term
short to
medium
term
China as a share of
net economic growth ¼ Ticket prices
US$-denominated oil
Non-local spare parts ▲
?
emerging market
currency fluctuations
slowdown in
China
©TeamSAI 7
DON’T GET COMPLACENT…MRO RISKS ABOUND M
RO
©TeamSAI
NAVIGATING THROUGH THE UNPREDICTABLE
FLEET AND MRO
OUTLOOK
8 04/08/2014
©TeamSAI
year-by-year fleet forecast
year-by-year MRO forecast
improved airframe modifications model
improved component MRO model
improved line maintenance model
implemented engine shop visit model and
improved interval driver methodology
improved labor/material differentiation across all
models
9
MODEL ENHANCEMENTS FOR 2014
04/08/2014
©TeamSAI 10
GLOBAL FLEET OUTLOOK - COMMERCIAL AIRLINE SECTOR
04/08/2014
2014-2024
Growth
Rate
2024
Market
Share
0.8% 24%
2.1% 18%
4.4% 17%
7.3% 12%
5.1% 8%
5.6% 6%
5.8% 6%
5.1% 5%
11.4% 3%
©TeamSAI 11
GLOBALLY, THE MRO GROWTH OUTLOOK IS HEALTHY
04/08/2014
$58B-
$87B Global Market
Size
+4.2%
CAGR
2014-2024
Airframe 4.1% 20%
Engine 4.1% 38%
Component 4.4% 22%
Line 4.1% 20%
CAGR % SHARE
©TeamSAI 12
MRO REGIONAL MARKET SHARES CHANGE DRAMATICALLY BY 2024
04/08/2014
ME/Africa • ME will double by 2024,
driving majority of
growth
Asia • Asia will be the largest
MRO market by 2024
Europe • EU to have moderate
MRO growth, at 2.9%
Americas • Large-scale fleet
replacement in NA
translates to flat MRO
• LA&C market drives
growth
Americas
Europe
Asia
ME/Africa
©TeamSAI 13
NORTH AMERICAN FLEET GROWTH WILL BE LIMITED
04/08/2014
pax traffic 2014F (IATA) ▲ 2.5% RPK
current fleet 2014 (Ascend Online) 7,305
fleet CAGR 2014-24 (TeamSAI) +0.8%
deliveries 2014-24 (TeamSAI) 3,700+
retirements 2014-24 (TeamSAI) 2,900+
RJ
▼
2014-2024
CAGR
0.8%
0.3%
-2.2%
1.3%
2.1%
©TeamSAI 14
NORTH AMERICAN MRO OUTLOOK
04/08/2014
$18B-
$19B
NA Market Size
+0.7%
CAGR
2014-2024
Airframe 1.9% 20%
Engine 0.0% 36%
Component 0.4% 25%
Line 1.3% 20%
CAGR % SHARE
©TeamSAI 15
NORTH AMERICAN MRO BY VINTAGE & MODEL TYPE
04/08/2014
Consider Impact
to MRO
less-mx-intensive HMV ▼
engine MRO honeymoon ▼
component MRO honeymoon ▼
1970s + 1980s share ▼
1990s, 2000s, 2010s share ▲
North America's Top 10 Aircraft Families in terms of MRO Spend
2014 2024 1 737 NG & MAX 15% 737 NG & MAX 28%
2 757 13% A320 CEO & NEO 18%
3 A320 CEO & NEO 12% 777 7%
4 767 8% 757 5%
5 CRJ-700/900/1000 7% Embraer 170/175/190/195 & E2 5%
6 CRJ-100/200 5% A350 4%
7 777 5% 787 4%
8 MD-80/90 4% 767 4%
9 ERJ-135/140/145 4% A330 3%
10 747-400 4% MD-11/11F 3%
©TeamSAI
NAVIGATING THROUGH THE UNPREDICTABLE
DEALING WITH
UNCERTAINTY AND RISK
16
04/08/2014
©TeamSAI 17
RISKS AND UNCERTAINTIES IN FLEET AND MRO FORECAST
04/08/2014
Region 2014-24
Net MRO Increase
AP $6.6
CH $6.2
ME $4.1
WE $3.4
LA&C $2.7
EE $1.9
IN $1.6
NA $1.3
AF $1.2
Total $29.2
Vintage 2014-24
Net MRO Increase
1970's -$1.2
1980's -$8.7
1990's $15.2
2000's $15.9
2010's $8.0
Total $29.2
HIGH: higher deliveries/lower retirements
moderate interest rates
stable economic growth in emerging regions
moderate oil prices
lower deliveries/higher retirements
higher interest rates
LOW: low economic growth
©TeamSAI
BENEFITS
18
POSITIONING THE BUSINESS EFFECTIVELY
04/08/2014
Methods to Achieve
strong balance sheet
good bottom line
distinctive reputation
effective scenario/ contingency planning
customer focus
broad vision
excellent execution
financial discipline
Le
ad
in
g Q
ua
litie
s EXCELLENCE
PROFITABILITY
▼SURVIVABILITY
▲VERSATILITY
PREPAREDNESS
©TeamSAI 19
AIRLINES’ WIDEBODY HMV WORK IN THE AMERICAS
04/08/2014
L. AMERICA
65% WB HMV
ALL IN HOUSE
N. AMERICA
38% WB HMV
8% IN HOUSE
30% ON SHORE
2%
2% 9%
49%
25%
10%
The opportunity to repatriate WB HMV is feasible, but not without risk
©TeamSAI
Deliver……..
Define ……..
Analyze……..
20
MROS MUST ANALYZE, DEFINE, AND DELIVER VALUE TO CUSTOMERS
04/08/2014
know your
market
know your
proposition
know your
customer
compelling presentation
execution
clear business case
pricing
clear strategy, positioning
market attractiveness
competitor analysis
market potential
©TeamSAI
NAVIGATING THROUGH THE UNPREDICTABLE
THANK YOU
21 04/08/2014
Chris Doan Chairman & CEO
TeamSAI, Inc.
(404) 762-7257
WWW.TEAMSAI.COM