Maintenance Repair and Overhaul Segments, Industry and Benefits

As airlines cut back on flying and ground aircraft, maintenance providers particularly those handling older airframes and engines saw their already-slender margins evaporate. But the continued financial struggles of the airlines could produce a as cash-strapped carriers windfall for the independent providers try to cut their costs, possibly by outsourcing maintenance. But airlines with revenues from third-party work are likely to become fiercer competitors.

A lot of the maintenance is done on an on-condition basis, so it doesn’t drive a many man-hours as would have been associated with earlier generation aircraft. OEMs dominate the engine segment, accounting for 46% of the repair business this year 2020 and that figure is expected to rise further.

What are the Segments of Maintenance Repair and Overhaul?

• Aircraft Services:
  • Modifications
  • Airframe Heavy
  • Line
• Engines
• Component

Segments and Pain Points of Maintenance Repair and Overhaul

What are the Pain areas in Maintenance Repair and Overhaul?

To maintain platform uptime & reliability, information must quickly flow between multiple organizations, departments & systems of the complex service ecosystem.

• Airline revenues declining
• Pressure from parent company to reduce costs
• Out-of-Compliance situations
• MRO must become profitable LoB
• High inventory levels

What are the Benefits of Maintenance Repair and Overhaul?

Companies implementing Maintenance Repair and Overhaul can improve efficiency, lower costs, and gain competitive advantage.

What are the Benefits of Maintenance Repair and Overhaul

• Improved Service Efficiency
• Increased Service Effectiveness
• Lowered Costs
• Gain Competitive Advantage
• Reduced Inventory Expense
• Increased Revenue from Improved Service
• Increased Planner Productivity
• Increased Technician Productivity
• Reduced Repair Costs
• Reduced Transportation Costs
• Increased Capital Efficiency

What are Sarbanes Oxley Implication on Maintenance Repair and Overhaul?

What are the Highlights of Sarbanes Oxley?

• The CEO/CFO must certify quarterly and annually that the SEC report being filed has been reviewed and does not contain any untrue statements or omit any material facts.
• Section 301 requires that Management certify internal controls and section 404 requires that Management annually assess the internal controls and procedures for financial reporting.

What are the Key Implications Sarbanes Oxley?

• Must automate offline processes to ensure compliance with company controls and spending guidelines.
• Requirements are not limited to traditional financial systems such as accounts payable. And it is dispersed among relationship management such as customer, supplier, planning such as supply chain, management such as asset, product life cycle, human capital, and operational solutions such as billing in the support of end-to-end processes.
• Reporting must include what the risks are and what the actual implications of contracts are in their entirety.

What are the Airline Maintenance Repair and Overhaul Organizational Challenges?

• Internal Challenges
• Drive for Cost Reduction
• Limited Capital
• Employee Moral
• Competing against upstarts and Low Cost Providers in US domestic markets
• Reducing non-fuel costs a problem with productivity gains already in place, and no pricing power
• Managing the Outsourced MRO process
• Maintain moral and making due on shoestring IT budgets (antiquated systems)
• Loss of Engineering & Other Support Functions
• Managing trend towards MRO outsourcing, while maintaining highest standards or fleet readiness

What are the Airline Maintenance Repair and Overhaul Organizational Challenges