In the December 2022 issue of AviTrader MRO Aerospace Magazine (edition #105) AerFin’s James Bennett and Steven Ades talk about an optimistic outlook despite looming industry headwinds.
Several MROs are upbeat about the general outlook for 2023 but a lingering pandemic in China, labour shortages, geopolitical issues in Europe and a strong US dollar are all discussions that will proceed in the new year.
James Bennett, AerFin’s Senior Vice President Sales mentions that much of the maintenance activity that was deferred during the height of the pandemic is now either taking place or is scheduled for 2023. “Our MRO customer base in particular has robust forecast activity to share and is now starting to purchase inventory in order to get themselves ready.” Bennett says this was not happening in volume through 2020, 2021 and the first half of 2022. Coupled with this is a much more cost-conscious operator base, keen to seek out options to reduce maintenance cost, one of the key drivers being material. He indicates that companies like AerFin are well positioned to capitalise on these initiatives.
Secondly, Bennett reminds that with increased demand, many of the MROs are struggling to ramp up labour and capacity. “As such, we are involved in discussions with some MROs as to how we can support activity through our quick turn engine maintenance capability we have in our Cardiff based facility. This is another key opportunity area for us,” he states.
Further, Industry experts are suggesting the strength of the U.S dollar will create additional cost challenges for global aviation, for instance, engine and component cost per flight hour agreements sold in $USD will equal to higher maintenance costs in the coming year.
A strong USD undoubtedly adds an increased level of cost pressure for operators and owners of assets who generate income in other currencies. AerFin sees continued strong demand for cost per flight hour agreements due to the visibility they give operators to better forecast their maintenance costs and put appropriate hedges in place to reduce currency risk.
Steven Ades, AerFin’s Chief Strategy Officer indicates that on the whole, cost pressures experienced by operators, whether driven by currency, labour rates or the price of raw materials create an environment of cost consciousness which drives the need for operators to access AerFin’s services which not only deliver demonstrable savings but also provide a range of options. Ades says USM can save in excess of 40% from buying new, and also allows partners to access piece part repair pricing through scale agreements. “Our MRO lite services extend the life of engines and defer costly engine overhauls to a time where cost pressures will hopefully be less pronounced,” he highlights.