In a report to be published soon after the show, aviation consultancy AT Kearney says overcapacity in the European maintenance, repair and overhaul market will force a shake-up in the industry.

"There will be some significant winners and significant losers," predicts Gareth Evans, a senior executive with AT Kearney.

"Everybody has been concentrating on survival over the past few years, but they haven't noticed significant changes. For example, nobody has switched off capacity," he said.


Kearney estimates that during the past three years the global MRO market has shrunk by 20% from $42.2 billion in 2001 to $32.5 billion in 2003.

Not only has demand declined, but there is more competition from low-cost suppliers in eastern Europe and elsewhere, and carriers are asking MRO providers to carry more risk, says Evans.

The MRO providers most able to withstand these pressures are the large groups that are not constrained by a European dimension, such as Lufthansa Technik and SR Technics, says Evans.

"These companies are producing some very innovative packages that do take on risk," he says. "Close on their tails are the OEMs," such as GE, Rolls-Royce and Pratt & Whitney.

Those most at risk are airline MRO operations and independent MRO providers. These organisations have less access to low-cost sources than their competitors due to their European base, says Kearney.

Source: Flight Daily News