Listen in to the first-ever MRO Podcast to be recorded live in front of an audience as Aviation Week's team share their takeaways from MRO Americas 2024 in Chicago.

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Transcript

James Pozzi:                 Thank you everyone for joining us for, I guess, I think the first ever live audience recorded MRO Podcast, certainly. I'm James Pozzi, I'll be hosting today, and I have three editorial and one data person joining me, who I'll introduce now. So to my left is Sean Broderick, senior air transport and safety editor for Aviation Week, and Lindsay Bjerregaard, who's managing editor for MRO of Aviation Week. And Dan Williams, senior manager of fleet, flight and forecast data at Aviation Week. And Lee Ann Shay, of course, executive editor for MRO and business aviation. So welcome everyone, thank you for joining us.

                                   So we'll start with Sean. What, over the last couple of days, are some of the key takeaways you've seen from the show? What's really stood out to you in terms of the MRO show or the trends you're seeing?

Sean Broderick:             Well, there's clearly a lot going on. There's no concerns of slowdown, I think, in the MRO world, basically in every facet of it. So today I was in a panel on used serviceable material, USM. So every show we do, we do a panel on USM, and it's sort of like the stock market: it changes, not quite daily like the market perhaps, but it's definitely not one of those subjects that's the same show to show. So the general consensus today is that while the assets, the used assets, entire airframes or engines, or if you can find both of them all together, then good luck to you. Prices are still high, but, at least on the component side, the prices that you're starting to see for the parts that are coming out of the teardowns are beginning to plateau, and that is a sign that you're starting to see stabilization, which is a good thing unless you're the ones buying the assets and then tearing them down. But for the rest of the market that consumes them, very good. So there was consensus around that.

                                   The other topic that's talked about at every show we do is retirements. I had four panelists today. Well, no, I didn't have them, I was covering the panel. Four panelists, two of them said we're going to see an increase in retirements this year versus last year, two of them said it's either going to be the same or it's going to go down. The variables, of course, we all know them, it's the inconsistent delivery schedules by the airlines, it's the groundings of the in-service fleets, mostly the geared turbofans, really pushing the used aircraft into, in some cases more overhauls for the engines, in some cases more airframe overhauls, but really bleeding every last cycle out of airplanes and engines that have them. One person who leases engines said they had an engine with 40 cycles and they had somebody that wanted a quote on how much it would be to lease to burn those 40 cycles off. So that's really getting down to the bone. So those are two takeaways today on things that we track pretty much at every stop.

James Pozzi:                 Very, very interesting indeed. Moving on to Lindsay, what are some things that caught your attention over the last couple of days?

Lindsay Bjerreg...:         Sure. So this morning we had a panel on generative AI and predictive maintenance, and we had a bunch of great panelists. We had somebody from Airbus, somebody from Boeing, somebody from Delta TechOps, somebody from United, and somebody from McKinsey. And one of my big takeaways from that is, especially the big airlines, the OEMs, they're all developing their own in-house AI models, large language models, and there was a lot of talk about, one, how do we do this safely? How do we do it transparently, responsibly? There was an interesting quote from the panelist from Delta TechOps. He mentioned that the technology now just allows you to make a bad mistake faster, so obviously there's concerns about AI, and so they're working hard, I think, on trying to make sure that they use that data responsibly, that they do it so that the results are accurate.

                                   Airbus actually talked a lot about the security of their AI models. So they want the AI models to be learning from a controlled pool of data. They don't want it to be like ChatGPT, which is just learning from everything on the internet. If it's aviation, we want to make sure that the information is accurate and that it's secure. And the other takeaway, too, it seemed like predictive AI has been fairly mastered. Obviously the MRO industry has been using that for a long time. But generative AI is fairly new territory, and it seems like people are still doing a lot of learning there, so it may be a while until we actually see that, particularly in terms of regulatory issues, getting that approved by the FAA, which is notoriously slow to approve any kind of new technology thing. So we'll see what happens, but there's a lot of action happening there.

                                   And then the other thing, it's going to tie into what I know Lee Ann is going to talk about, but there was a lot of workforce and diversity related content at the show this week. The panel that I moderated at the GoLive! Theater yesterday about training schools and the workforce shortage, they talked a lot about how we need to be getting kids sooner. So if you've heard the workforce discussions in MRO, you've probably heard we need to be getting them before high school, we need to get middle schoolers, kindergartners. And one thing that I thought was really interesting that tied into that was today, Aviation Week hosted a bunch of local high school students from Chicago to come to the show to learn about aviation careers. They got to go see the show floor and talk to some companies. But at one point during the morning panel, somebody asked them, "How many of you have actually flown on an airplane?" and maybe half of those students raised their hand. So when we're having conversations with these young kids to introduce them to aviation, we've got to put things into terms that they understand. You can't just throw technology terms at them, you've got to really do things to get them engaged, and I'm sure Lee Ann will chime in on that as well.

Lee Ann Shay:               Yeah. Can I hop in on there? I totally agree. And this morning I moderated a panel about diversity with Doug Parker, former chairman and CEO of American Airlines, Dr. Tammera Holmes, co-founder and CEO of AeroStar here in Chicago, and also Marty Nesbitt, who is co-founder of Vistria Group, and he's on the board of American Breaking Down Barriers, which is a nonprofit that Doug and his wife started to try to encourage or break down the systemic and financial barriers that hinder people getting into aviation. And so it was a heartening discussion and the room was full, so for a Wednesday morning 9:00 conference session on diversity, I was really heartened by that.

                                   So yeah, I agree, with everything Lindsay said. And the Aerospace Maintenance Competition here; you've got the students, you've got airline teams, just seeing the dynamics there. And when I was walking over into the Aerospace Maintenance Competition with Tammera, she saw a person who joined her program at the age of 14 in an after-school program here in Chicago, and then this young lady got her A&P license through a local community college here in Chicago, and now she's working over there on the Aerospace Maintenance Competition. So we're seeing the fruits of mentoring getting into the local communities, getting people into their industry, and it's working, so that was very heartening.

James Pozzi:                 Yeah, certainly the future does seem bright with the talent we've seen around and the younger talent entering the industry. And as you mentioned, the AMC competition is real testament to that.

Lee Ann Shay:               And in addition to workforce, I'd also like to mention that I think there's some interesting M&A, mergers and acquisition, news and rumors starting to float around this hall. AAR recently purchased, I guess it was March 4th, Triumph's Product Support Group for $725 million, which is a pretty big acquisition, and I think has gotten a lot of other companies to start thinking about what bolt-ons, what other companies that they're looking for. And just based on some of the bankers and other people who I've observed walking through these halls, I think there might be some more M&A activity in the industry in the next year.

James Pozzi:                 Yeah, one of the panels earlier actually I saw was stating similar about alluding to more consolidation perhaps being on the horizon. So yeah, it'd be interesting to see. And Dan, I've seen you over the last couple of days doing forecasts, obviously always interesting with some...

Dan Williams:               Not always. [Audience laughs]

James Pozzi:                 Some interesting numbers of course as well. Yeah. Could you really provide us with some interesting details about maybe North America and some of the interesting data you're seeing in the region at the moment?

Dan Williams:               Yeah. Well, I'm just going to start with two of my takeaways, and I'm going to piggyback on Lindsay and Lee Ann. Workforce, everybody's talking about workforce, but it's different reasons we're now talking about workforce. The workforce in terms of headcount, if you go to speak to some people, is pre-pandemic levels. The issue we have now is experienced in that workforce. And that's where bringing in students is wonderful, it is a great thing. It won’t solve our problem today, it may solve our problem in 10 years, may solve our problem in 15 years, but we've still got that experience gap. Now, that is impacting the supply chain because there's an experience gap in producing stuff in the supply chain. It's crippled Spirit Aerosystems with the snowmen holes. It is throughout the system where experienced workforce is an issue, and an ongoing issue. It's getting better, but it's not fixed, and probably won't be fixed for... I think John from AAR said he anticipates maybe a couple more years before that even gets close. We have the keynote he opened and said, "We're having issues with workforce," and that was the starter to kick us all off.

                                   The other thing that I've been asked about more this time in terms of forecast at this MRO show is engines. I get asked about engines a lot at our Aero-Engines events, and that doesn't surprise me because they know so much more about engines than I will ever do. They know more than I will ever know. But people are really interested in the impacts—to what Sean said before—the GTF is having keeping legacy aircraft in service. I've talked more about the CFM56 and the V2500 in the past couple of days than I've probably talked about in my entire life. People are really interested as to the impact that the GTF, not so much the LEAP anymore because they've got that under control, but the GTF is having on the industry.

                                   And the impact, going back, again, to what Sean said, of the, I'll say the inability for the OEMs to deliver aircraft, because they're constrained by the supply chain, the workforce, et cetera, so it's having this impact. And people in this room must love the fact that a CFM56 is going through potentially an extra overhaul to make it last another 3, 4, 5 years. However, that has other consequences within the system. So engines has been my big takeaway, which I don't normally expect to have at a big MRO show. I normally expect more airframe, but it's engines, engines, engines and workforce, workforce, workforce.

James Pozzi:                 Absolutely. Yeah. And of course, I moderated a panel later about the engine supply chain, and there's certainly plenty of issues there in this region. StandardAero, Lufthansa Technik Americas, one of their leaders, and Delta, too. And yeah, there's a lot of headaches at the moment in the supply chain, and I asked them really to get a score on the doors out of 10, one being bad, 10 being the best, and I don't think it averaged more than a four at the moment, so that's very unpredictable right now. But the optimistic side is they think that may change in a year, could go up to a seven or an eight, so it's just the way it's been the last couple of years, and that looks set to continue, really. So any closing thoughts from the panel?

Sean Broderick:             I'll chime in on the workforce and fast-tracking getting experience. One of my panelists, Lori DiMarco from Mesa, shared something unexpected that we were there to talk about challenges in the regional industry and the low-cost carrier industry, but she brought in the concept of being a mentor at an airline that doesn't have a formal mentorship program. And she, Lori, if you don't know her, she'd had tremendous experience, was a director of maintenance at FedEx back in 2006, first female from the Aviation High School in New York, so she's seen a lot and has a lot of tremendous experience, and she doesn't talk much about it. What she does is uses it to give back to the people that she works with.

                                   And she spends, it sounds to me, like an inordinate amount of time working with either the people that have come into the company from outside, or the people who are new to the industry that come into Mesa [Airlines]. And it struck me that none of the panelists up there had a formal mentorship program, which I guess is not unusual, but she gave really simple ways to say, "Look, you can sit down and be your own mentorship program within your company," and it speaks to what Dan said is an important gap that needs to be filled, getting people up to speed on what they need to know as quickly as possible beyond having an A&P ticket or something like that is crucial today.

Lee Ann Shay:               And Tammera also mentioned that's one of the easiest things you could do, is go mentor somebody in your workforce, that's easy to do. And about an hour ago, the Airlines for America EMMC panel, Leo Warmuth from FedEx Express said that FedEx is working on integrating more videos into their manuals just so the younger mechanics, as they called it, juniority, can easily sift through some of those repairs and incorporate those videos. And then Robert Cooney from Delta, who I think his title is director of [fleet] engineering, he said that Delta is also looking into that. He said, "When you're at home and you're trying to figure out how to do something, what do you do? You get on your phone, you look at YouTube, right?" And he's like, "There's got to be some more just visual things that are incorporated into maintenance manuals to help everybody in the maintenance industry."

Lindsay Bjerreg...:         I totally want to add on to what both Lee Ann and Sean just said. So regarding YouTube videos for maintenance, this doesn't help the people listening at home, but if you're still here at the show, go pick up a copy of Inside MRO, our latest issue. There's an interesting story in there that I wrote, I'm a little biased, but there's a bit in there about how PSA Airlines has overhauled their training systems, specifically to address that juniority issue. There's a large percentage of the workforce that has less than five years of experience, and they're more used to digital technologies. So they've essentially created their own in-house YouTube channel with training videos. They're incorporating that with a virtual reality 360 system that can show you views of the aircraft, and it's really cool.

                                   And then the other thing, mentorship, one other person who brought that up also speaking to those high school students today, was Stacey Rudser, who is the president of the Association for Women in Aviation Maintenance. She was asked to give the kids in the room one tip for if they want to succeed in the industry, and specifically women in the industry, and she said, "Find your mentors. Find somebody who's doing something that you think is interesting, whether or not it's in the industry that you're working in," and I think that's an important thing that resonates with everyone.

Dan Williams:               Yeah, and just to add on the mentorship thing, speaking with Embraer, and they said something in process to do the mentorship program internally, and you go and speak to them and Frank Stevens there will tell you this story. Pre-pandemic, you needed 10 people to do a role, you have the 10 people to do the role. After the pandemic, you needed 10 people to do the role, you only had five people to do the role. Today, you need 10 people to do the role, you have those 10 people, but only five of them have enough experience to do the role because they are buddied up, they use a buddy-up system to train the new. So takes us back to the headcount is there, and you go and speak to... I've spoken to Boeing, they're like, "We employ more people now than we did pre-pandemic." Yes, but it's not a headcount gap, it's an experience gap.

James Pozzi:                 Thank you. We'll leave that there today, and thank you very much for all your insights, everyone, from MRO America's 2024. And thank you for listening to the first ever live-recorded MRO Podcast. We certainly enjoyed it, I hope you did too. And listen again next time. There we go.

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