A series of changes over the last year has altered the Americas' MRO sector. The U.S. airline industry entered a possible consolidation end game, a major full-service provider—Aveos—liquidated, and Latin America continued its emergence as a blossoming repair center for narrowbody jets. And after years of airline cutbacks, carriers finally gave MRO providers news to celebrate.
“We are at nearly five million man-hours at five MRO locations in the U.S.,” reports Jack Arehart, co-chief commercial officer for AAR Corp. “We are seeing a lot of modification projects, such as inflight entertainment and lie-flat seat installations, as more of our customers are choosing a broader selection of AAR services during a shop visit.”
AAR has benefited from the closure of Aveos, which performed 75% of Air Canada's MRO. AAR now handles a variety of MRO services, from repair activity management to aircraft and landing gear repair services, says Arehart. Both Air Canada and Aveos were AAR customers, Arehart notes, explaining that the Aveos bankruptcy created instant capacity that AAR was able to put toward additional Air Canada work.
The MRO wasn't the only company to land new work from neighboring operators in 2012. “[Last year] was a busy year for contract bids by North American operators,” says Leonard Kazmerski, vice president-marketing and business development at Timco Aviation Services. “In addition to booked work, there were several new programs which absorbed some excess capacity from North American MROs in prior years. While there still is available capacity, this market is clearly in a better state of health than it has been for several years.”
Airline mergers rank high among the reasons why. Jim Sokol, vice president-maintenance operations for Southwest Airlines, points out that within the past two years, mergers—such as Southwest-AirTran Airways—have triggered peak MRO activity as airplane cabins and liveries are reconfigured to match the new brand.
“This type of work tends to occur outside the scope of normal maintenance planning, and accounts for the spike in business at some North American MROs,” Sokol says. “But in order to win these significant new business opportunities, the MROs have positioned themselves to be more competitive by improving their internal capacity to meet established time commitments to their customers.”
Aviation Technical Services (ATS) President/CEO Matt Yerbic says that airline operations are getting back to the 1.1 trillion seat miles flown prior to 2007, which means that there will be increasing demand for MRO services. The Everett, Wash.-based MRO completes 500 aircraft annually—mostly Boeing 737s for customers such as Southwest and Alaska Airlines. Yerbic cites a trend of widebody airframe work returning to the U.S. from Asia. “We are seeing this especially on the Boeing 777 because the cost differential between the U.S. and Asian MROs is narrowing,” he explains.