AJW Sees Buoyant 2018, But Bubble in Teardown Prices AJW

AJW Sees Buoyant 2018, But Bubble in Teardown Prices

Company's VP for strategic material & asset management makes predictions for next year.

2018 is shaping up as mostly “buoyant” for the AJW Group, according to Conrad Vandersluis, senior VP for strategic material & asset management.

This is pretty much true across the board, in part sales and exchanges, repair management and flight-hour programs. The flight-hour market is getting more competitive, but is still a growth area for AJW. By the end of 2017, AJW, based in the UK, was doing 45% of its business in flight-hour contracts, 30% in parts and exchanges and the remainder in repair management, consumables and expendables. These figures exclude MRO carried out by AJW Technique, the Group’s component MRO facility in Canada.

Vandersluis also sees healthy markets across the globe, in Europe, CIS, both North and South America and in Asia. However, fleet changes in The Middle East mean markets are “not as good as we would like.”

AJW Group now employs about 750 people, a count expected to grow with contracts won in recent months. Vandersluis expects AJW Technique, with 200 staff, to continue to grow its capabilities. The global asset manager will likely stick with its warehouses in the UK, Singapore, Miami and Los Angeles, adding to stocks rather than expanding locations.   

The key to successful asset management remains “having the right stocks available,” Vandersluis stresses. And AJW manages repairs in such volumes that it is treated by shops as a major airline.

The firm has not been buying many aircraft for teardown recently. Vandersluis thinks there has been a bit of a bubble in teardown pricing as some firms, perhaps with funds that have to be spent, pay too much for aircraft for disassembly. For example, about a half dozen Boeing 777s have been sold for teardown, driving prices down on used 777 components.

AJW is now heavily involved in support of both Airbus A320ceos and neos, for example with EasyJet and Vivaaerobus, and is moving into support of 737MAXs as well. But it avoids the 787, A350 and A380 as “the OEMs have that market cornered,” Vandersluis says.

The AJW exec says the big risk in part trading remains rapid decreases in the number of a particular type in operations, as happened with the 747-400 and older 737s NG. That simultaneously cuts demand and boosts supply of parts, leaving overstocked part traders in big difficulties. BREXIT has not affected AJW’s business “at this stage,” Vandersluis says, although the firm is “watching it closely.” AJW does a fair proportion of its business in the European Union, but a large share outside the EU as well.

TAGS: Components
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