Current Component Values and Challenges Posed by New Families of Aircraft

Transcription

1 September 29, 2016 Presented by: John Cunningham ICF International Current Component Values and Challenges Posed by New Families of Aircraft 0

2 Agenda MRO Demand and Spend Valuation Principles Aircraft vs. Components Fleet Demographics & Technology Financing 1 1

3 The demand for MRO (and materials) is distributed across a wide range of aircraft and engine types each with different behavior 5,000 4,500 4,000 3,500 3,000 Airframe Materials MRO Demand Base Forecast (2015 USD Millions) 737-6/7/8/ MAX 767-2/3/ / /9/10 A318/319/320/321ceo A319/320/321neo A330-2/300 2,500 2,000 1,500 1,

4 As demand for fleet types declines, demand for material these platforms also falls Engine Materials MRO Demand Base Forecast (2015 USD Millions) 5,000 4,500 CF34-8 CFM56-5B GE90 CF6-80C2 CFM56-7B PW2000 4,000 PW RB ,500 Trent 700 V2500-A5 3,000 2,500 2,000 1,500 1,

5 Since 2010 the aircraft maintenance business as measured by global spend - has increased by nearly 60% and is expected to grow to over $96.0B by 2025 $120 $100 $80 $60 $40 $20 $0 $59.0 $60.9 $64.3 $67.3 Global MRO Spend (2015 USD Billions) $70.4 $73.9 $ $79.7 $82.5 $85.8 $89.7 $93.2 $ CAGR Modifications, 5.3% Airframe, 2.8% Line, 3.6% Component, 4.3% Engine, 4.4% 4 4

6 MRO spend is, and will continue to be, broadly distributed across the world 2015 $ Billions $120 $100 $80 $60 $40 $20 $0 Global MRO Spend by Operator Region (2015 USD Billions) $59.0 $60.9 $64.3 $67.3 $70.4 $73.9 $ $79.7 $82.5 $85.8 $89.7 $93.2 $ CAGR Caribbean, 1.5% Near East, 3.5% W.Africa, 8.1% E.Africa, 10.9% E.Europe, 4.5% S.Africa, 3.2% N.Africa, 5.6% C.America, 8.3% Indian Sub-Continent, 9.5% Australasia, 5.7% S.Europe, 4.4% CIS, 5.9% S.America, 5.0% Far East, 3.3% SE Asia, 6.2% Middle East, 7.5% China, 6.8% W.Europe, 0.9% N.America, 1.6% TOTAL = 4.1% Growth will be most rapid Asia/Pacific and Middle East, as fleets and MRO capacity in these regions increase substantially over the next ten years 5 5

7 Multiple Factors Drive Values of Aircraft and Engines and the Parts that Support them Key Valuation Principles 6 6

8 Rotable Spare Parts tend to hold their values better than the fleet types they support Values: Aircraft Versus Components Indicative Value Comparison of Rotable Spare Parts to Whole Aircraft Values Indexed Value 2005= Spares: 757/767 Spares: 777 Spares: A320 Family ER ER A

9 With Boeing and Airbus ramping up production on their single-aisle products the new technology neo and Max will begin to account for a greater share of the overall narrowbody fleets and 737 MAX 8 Active Fleet Forecast Active Fleet 8,000 7, MAX 8 6, ,000 4,000 3,000 2,000 1,

10 Although the A320 neo will supplant the ceos fleet by the middle of the next decade, there should be continued demand for material given the level of commonality between the types Active Fleet 12,000 10,000 8,000 6,000 4,000 2,000 0 A320 Family Statistics and Airframe and Engine MRO Materials Demand A320neo A320ceo A320 Family Fleet Statistics Millions USD 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 - Airbus A320 Family Airframe and Engines Spare Parts MRO Materials Demand Ceo Airframe CFM56-5A CFM56-5B PW6000 V2500-A1 V2500-A5 Neo Airframe Leap-1A PW

11 Financing Structures and market liquidity characteristics Commercial Aircraft Finance Markets Continue to be Healthy Demand for fleet finance exceeds $120Bn annually forecast at $127Bn (Boeing Capital Corp.) Interest rates, fuels costs, liquidity driving strong airline profitability. IATA forecast $39.4Bn for full year Aviation sector very attractive to capital markets, banks, investors relative to other industries. Wide range of financing structures available to MRO and airline borrowers at good rates. Both debt and equity readily available. Structures traditionally available to aircraft deals now available to support engines and components. Liquidity is therefore very strong in aviation sector today and many alternative financing sources available

12 September 29, 2016 HANK YOU! For questions regarding this presentation, please contact: John Cunningham Senior Advisor Aviation Consulting & Services

13 Aircraft Asset Advisory Aerospace & MRO Airline Advisory Airports ICF is one of the world s largest and most experienced aviation & aerospace consulting firms 53 years in business (founded 1963) 80+ professional staff Dedicated exclusively to aviation and aerospace Blend of consulting professionals and experienced aviation executives Specialized, focused expertise and proprietary knowledge Broad functional capabilities More than 10,000 private and public sector assignments Backed by parent company ICF International (2015 revenue - $1.05B) Global presence offices around the world joined ICF in 2011 joined ICF in 2007 New York Boston Ann Arbor London Singapore Beijing Hong Kong 12 12