The aerospace aftermarket segment is on a recovery path after having been dogged recently by the same supply chain issues that have caused aircraft manufacturers so much trouble.
That is according to Boeing Global Services (BGS) senior vice-president William Ampofo, who says intense demand for new jets has placed more pressure on the aftermarket side of the business, but that conditions are rebounding.
“The challenge is, now that the production cycles for OEMs have lifted, and [OEMs] are doing rate breaks, it’s putting demand on the supply base,” says Ampofo, who heads BGS parts, distribution and supply chain.
“We’re not over the hump. Definitively not,” he adds. “We really are in recovery mode.”
The aftermarket segment continues adjusting to broad shifts that arose during and continued after the Covid-19 pandemic.
For starters, a wave of consolidation has swept the sector, with some smaller firms failing and others, particularly large players, combining, such as the unification of Collins Aerospace, Pratt & Whitney and United Technologies under RTX.
Also, a “demographic shift” has upended the aftermarket industry – and indeed the entire aerospace sector – driven by “accelerated” retirements of veteran workers, Ampofo notes.
One-off events – including an explosion last year at a facility operated by SPS Technologies, a Precision Castparts subsidiary that supplies fasteners and other aerospace components – also set back the sector.
At the same time, airline operations have been widely disrupted by unexpected maintenance issues affecting new-generation engines, requiring airlines ground hundreds of jets, which dumped even more demand onto an already strained MRO sector.
Meanwhile, aircraft manufacturers – Airbus, Boeing, Embraer and also business jet makers – are eager to accelerate production amid roaring demand. They are pressuring the manufacturing base to speed things up – and that pressure has worked into the aftermarket.
“You’ve got this perfect growth trajectory that is pulling on the same supply base,” Ampofo says.
Boeing can do only so much to mend what are broad structural issues but it is working the angles it can.
Last year, the manufacturer established a “supplier recovery team”, using its “engineering and technical resources” to help suppliers become more efficient and boost output. Boeing has also branched out, identifying new suppliers and helping them fund expansion and achieve regulatory approval.
Ampofo says while the industry has largely overcome quality problems that dogged manufacturers in recent years the primary outstanding issue is one of insufficient output.
Amid those challenges, Boeing tweaked its BGS business in ways executives say reflect increased focus on what the company does best: building and servicing Boeing jets.
Last decade, prior to the 737 Max crisis, BGS was on an expansion spree, buying up other businesses as part of a strategy by then-group CEO Dennis Muilenburg to increase services revenue to $50 billion annually by the mid-2020s, up from $13.9 billion in 2016.
Boeing stepped away from that expansionist goal around 2020, bringing its ambitions back to earth and describing its revised approach as more conservative.
In November, it sold four digital businesses that were within BGS – AerData, ForeFlight, Jeppesen and OzRunways – to investment firm Thoma Bravo, raising $10.6 billion and helping Boeing retain a solid credit rating.
Nothwithstanding the revised strategy, BGS remains a massive business, generating $20 billion of revenue in 2024.
And despite jettisoning those digital businesses, BGS is increasingly using digital- and data-related technologies to improve internal efficiencies and to adopt a more-predictive service model.
“There’s streams of data that are coming off of aircraft… We’re trying to establish strong partnerships so that we understand the data profiles of our customers,” Ampofo says.
Component planning has historically been rearward-looking, with suppliers anticipating parts demand based on prior usage. BGS recently leaned heavily into its Parts Planning Hub, a system through which airlines and MRO customers can “seamlessly” share parts requirements with Boeing.
“This is an integrated interface that allows us to exchange data, so that we [can] run simulations and models that feed into our planning tool,” Ampofo says.
Boeing now has seven Parts Planning Hub customers that are “active forecast collaborators”, meaning they participate in a fuller suite of services that include collaborative forecasting with Boeing. The company aims to secure another five of those customers this year.
Boeing previously called the system Digitally Integrated Supply Chain but rebranded it Parts Planning Hub as part of a push in the last year to expand adoption.
While some airlines initially hesitated to share their data with Boeing, “they quickly saw that the value was there. They saw an 8-10% improvement in their on-time delivery just by sharing data”, says Ampofo.
Boeing expects the value of the aircraft services market to increase an average of 3.8% annually over the next 20 years, according to its 2025 Services Market Outlook.
