MRO Industry Girds For Aircraft Retirement Tsunami

By Kevin Michaels
Source: Aviation Week & Space Technology

Several dynamics will determine the magnitude of the aircraft retirement tsunami. An increase in interest rates will make purchases of new jets less attractive and reduce airlines' desire to retire older aircraft, reducing the supply of part-outs. Similarly, a decline in fuel prices—a genuine possibility as growth in the global economy slows and the North American energy boom continues—will also make older aircraft models more viable.

Therefore, it is prudent to think in terms of scenarios. Our low-case scenario for total retirements in 2010-19 is 6,000. This model includes falling fuel prices, increasing interest rates and possibly delays in one or more aircraft introductions. Our high-case scenario for retirements is 8,000 units, or 800 aircraft per year. This situation assumes a continuation of low interest rates, high fuel costs and new-aircraft production targets being met.

Regardless of which case proves true, the balance of this decade promises to provide an interesting journey for the aircraft MRO business.

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