V2500_MRO-MTU-1600x800.jpg MTU
(c) Andy Ridder, MTU Hannover verschiedene Reparaturverfahren

Engine Market Surge Part of ’Sustained’ MRO Recovery, Canaccord Says

Widebody work, older airframes contributing to uptick.

The commercial aftermarket, bolstered by continued strong traffic and low fuel prices, appears to be “in the early innings of a sustained recovery,” Canaccord Genuity analyst Ken Herbert says.

Pointing to recent quarterly earnings data points as evidence, Herbert says that the big-picture MRO market continues to brighten, with engine work maintaining notable momentum.

“[C]an it get any better for commercial transport engines?” Herbert writes in a recent research note. “We see steady growth here based on the ~10% growth in narrow-body engine shop visits,” including the IAE V2500 and CFM56-5B and -7B.

Widebody engine trends are also positive. Rolls-Royce cited the aftermarket as a primary driver in its 14% year-over-year jump in civil revenues last quarter. And while much of Safran’s 8.4% quarterly jump in civil engine aftermarket business was driven by CFM56 work, CEO Philippe Petitcolin cited “very good” performance for GE90 parts and services as part of the good-news story.

Herbert also pointed to work on older aircraft racking up higher-than-expected utilization figures as a positive driver. “Lower fuel is finally translating to increased usage of older aircraft with above-normal traffic,” Herbert says. Global passenger traffic demand was up 7.9% in the first half of 2017, a 12-year high, International Air Transport Association figures show.

The trend has advanced beyond hearsay into needle-moving territory. MTU is among those reaping the benefits of strong V2500 overhaul demand. But the company cited better-than-expected demand for mature engines, including the GE CF6 and Pratt & Whitney PW2000, as a “the reason” it recently increased its 2017 engine MRO revenue growth projection to the mid- to high-teens, up from 10%.


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