navigatingthrough the unpredictable -...
TRANSCRIPT
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NAVIGATING THROUGH THE UNPREDICTABLE
UNCERTAINTY AND RISK . . .
2014–2024 GLOBAL MRO FORECASTMRO EUROPE CONFERENCE
OCTOBER 2014
10/07/2014
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NAVIGATING THROUGH THE UNPREDICTABLE
A LOOK BACK
210/07/2014
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IN 2004, TEAMSAI PREDICTED MRO IN 2014 WOULD EXCEED $56B
10/07/2014
$42.7
$56.5
2004 20142004 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
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-5.0%
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%Historical and Forecast GDP Growth in the EU
4
THINGS MAY BE CALMING DOWN IN THE EU
10/07/2014
AFTER A TUMULTUOUS FEW YEARS, EUROPE SEEMS POISED FOR GROWTH
Source: IMF World Economic Outlook, 4/2014
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BUT DIFFERENT REGIONS TELL DIFFERENT STORIES
10/07/2014
BUT PEELING BACK THE EU CURTAIN SUGGESTS GROWTH IN SOME REGIONS COMES WITH RISKS
Source: IMF World Economic Outlook, 4/2014, UN country groupings
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Region Issue RisksEastern Europe
Strong growth in recent years but now subject to serious concerns
• Tension between Russia and Ukraine
• Soft energy prices in Europe contribute to the East’s economic weakness
• Geo-Politicalrisk
SouthernEurope
Moderate growth in countries still struggling with austerity
• Debt levels remain high• Weak consumer market
• Credit / Forecast risk
NorthernEurope
Strong growth forecast
• Relatively calm countries but volatile results
• Forecast risk
Western Europe
Moderate growth in most countries
• Largest basket but history has shown these countries too can be volatile in terms of GDP growth
• Forecastrisk
Europe Implementation of sanctions on Russia
• Across all regions, sanctions could hinder fragile recovery
• Geo-Politicalrisk
6
RISKS SPEFIC TO EU REGIONS
10/07/2014
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WHAT DOES IT MEAN FOR MRO PLANNING?
10/07/2014
MROPLANNING
risks and uncertainty abound…
ForecastUncertainties
MROUncertainties
Geo-PoliticalRisks
NaturalDisasterRisks
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DON’T GET COMPLACENT…GEO-POLITICAL RISKS CONTINUE
10/07/2014
slowdown in China
• Chinese economic growth accounts for 24% of net global growth
GEO
-PO
LITI
CA
L
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 ¼Ticket prices
US$-denominated oilNon-local spare parts ▲
?
emerging market currency fluctuations
slowdown in China
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DON’T GET COMPLACENT…MRO RISKS ABOUNDM
RO
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NAVIGATING THROUGH THE UNPREDICTABLE
FLEET AND MROOUTLOOK
1010/07/2014
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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
11
MODEL ENHANCEMENTS FOR 2014
10/07/2014
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GLOBAL FLEET OUTLOOK - COMMERCIAL AIRLINE SECTOR
10/07/2014
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%
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GLOBALLY, THE MRO GROWTH OUTLOOK IS HEALTHY
10/07/2014
$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
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MRO REGIONAL MARKET SHARES CHANGE DRAMATICALLY BY 2024
10/07/2014
ME/Africa • ME will double by 2024, driving majority of growth
Asia • Asia will be the largest MRO market by 2024
Americas • Large-scale fleet replacement in NA translates to flat MRO
• LA&C market drives growth
Europe • EU to have moderate MRO growth, at 2.9%
Europe
Americas
Asia
ME/Africa
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EUROPEAN FLEET GROWTH WILL BE SOLID
10/07/2014
pax traffic2014F (IATA) ▲ 4.7% RPK
current fleet2014 (Ascend Online) 5,950
fleet CAGR2014-24 (TeamSAI) +2.9%deliveries2014-24 (TeamSAI) 3,700+
retirements2014-24 (TeamSAI) 1,700+
RJ▼
2014-2024 CAGR
2.9%
1.3%
-0.5%
3.3%
3.7%
WE EE EUGrowth 1,104 872 1,976 Replacement 1,591 138 1,729
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EUROPEAN MRO OUTLOOK
10/07/2014
$16B-$22B
EU Market Size
+2.9% CAGR
2014-2024
Airframe 2.0% 23%Engine 3.1% 33%Component 3.5% 20%Line 3.0% 24%
CAGR % SHARE
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EUROPEAN MRO BY VINTAGE & MODEL TYPE
10/07/2014
Consider Impact to MRO
less-mx-intensive HMV ▼engine MRO honeymoon ▼component MRO honeymoon ▼1970s + 1980s share ▼1990s, 2000s, 2010s share ▲
Europe’s Top 10 Aircraft Families in terms of MRO Spend2014 2024
1 A320 CEO & NEO 29% A320 CEO & NEO 29%2 737 NG & MAX 14% 737 NG & MAX 21%3 747-400 10% 777 8%4 777 9% A350 7%5 A330 7% A330 6%6 A340 7% 787 4%7 737 Classics 6% A340 4%8 767 3% 747-8 3%9 757 3% A380 2%
10 Embraer 170/175/190/195 & E2 2% 747-400 2%
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NAVIGATING THROUGH THE UNPREDICTABLE
DEALING WITHUNCERTAINTY AND RISK
1810/07/2014
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RISKS AND UNCERTAINTIES IN FLEET AND MRO FORECAST
10/07/2014
HIGH: higher deliveries/lower retirementsmoderate interest ratesstable economic growth in emerging regionsmoderate oil prices
lower deliveries/higher retirementshigher interest rates
LOW: low economic growth
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BENEFITS
20
POSITIONING THE BUSINESS EFFECTIVELY
10/07/2014
Methods to Achieve
strong balance sheet
good bottom line
distinctive reputation
effective scenario/ contingency planning
customer focus
broad vision
excellent execution
financial discipline
Lead
ing
Qua
litie
s EXCELLENCEEXCELLENCE
PROFITABILITYPROFITABILITY
▼SURVIVABILITY▲VERSATILITY
▼SURVIVABILITY▲VERSATILITY
PREPAREDNESSPREPAREDNESS
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Deliver……..Deliver……..
Define ……..Define ……..
Analyze……..Analyze……..
21
MROS MUST ANALYZE, DEFINE, AND DELIVER VALUE TO CUSTOMERS
10/07/2014
know yourmarketknow yourmarket
know your propositionknow your proposition
know yourcustomerknow yourcustomer
compelling presentation
execution
clear business case
pricing
clear strategy, positioning
market attractiveness
competitor analysis
market potential
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NAVIGATING THROUGH THE UNPREDICTABLE
THANK YOU
2210/07/2014
Dave MarcontellPresident & COOTeamSAI, Inc.(404) [email protected]
WWW.TEAMSAI.COM