Unprecedented Growth in Aircraft Maintenance Industry Set to Skyrocket by 2029 Amidst New Plane Shortages
By Rozanna Latiff
KUALA LUMPUR (Multibagger) - The global aircraft repair industry is poised for significant growth over the next six years as airlines extend the operational life of their jets due to a shortage of new aircraft, according to Mahesh Kumar, CEO of Malaysia-based aviation services firm Asia Digital Engineering (ADE).
With new aircraft deliveries sharply declining in recent months due to supply chain disruptions and rising labor costs, airlines are increasingly turning to maintenance, repair, and operations (MRO) services to keep older planes in the air, Mahesh explained.
"It's a boom for the MRO business," Mahesh told Multibagger in an exclusive interview on Monday.
ADE, a subsidiary of Capital A, which also owns budget airline AirAsia, has experienced impressive growth since its inception in September 2020 at the height of the COVID-19 pandemic. The company, which provides both line maintenance and comprehensive base maintenance checks, doubled its annual revenue in 2023 to 574 million ringgit ($122.91 million) amid a surge in flying activity.
The demand for ADE's services is so high that its slots are fully booked until the end of 2025. This includes its new 14-line maintenance hangar near Kuala Lumpur International Airport, which will be Malaysia's largest when it opens in August, Mahesh said.
While AirAsia remains ADE's biggest customer, the company anticipates attracting more third-party airlines and expanding its services to cover a broader range of aircraft, including potentially those from Chinese planemaker COMAC, which aims to compete with Boeing (NYSE:) and Airbus.
"They've approached us and we have visited COMAC's facilities as well," Mahesh noted, though no formal cooperation plans have been made yet.
"There's a lot of similarity between Airbus and COMAC's aircraft components. From an MRO perspective, we are excited to service their airplanes," he added.
ADE is also addressing industry delays caused by ongoing labor and supply challenges. The company has developed software to monitor and predict an aircraft's maintenance needs, reducing average repair times by 20%-30%, according to Mahesh.
Additionally, ADE operates Aerotrade, an online marketplace that allows airlines and aviation companies to buy and sell aircraft parts.
($1 = 4.6700 ringgit)
Analysis and Breakdown
What This Means:
- Industry Growth: The global aircraft repair and maintenance industry is set for substantial growth due to a shortage of new planes.
- Extended Plane Lifespan: Airlines are keeping older planes in service longer, increasing the demand for MRO services.
- Revenue Surge: Companies like ADE are experiencing significant revenue increases due to heightened demand for their services.
- Future Prospects: ADE is expanding its capacity and looking to service more third-party airlines, potentially including those from COMAC.
- Technological Advancements: ADE is utilizing advanced software to improve maintenance efficiency, reducing repair times.
Impact on Your Finances:
- Investment Opportunities: The booming MRO sector could present lucrative investment opportunities in aviation service companies.
- Stock Market Growth: Companies involved in aircraft maintenance and repair could see their stock prices rise, benefiting investors.
- Travel Industry: The extended lifespan of planes might lead to more affordable flights, impacting travel expenses for consumers.
In simpler terms, the next few years are looking very promising for companies that fix and maintain planes because there aren't enough new planes being made. This is good news for investors, as these companies are making more money and could be a good place to put your money. Additionally, it might make flying a bit cheaper for everyone, as airlines keep using their older planes longer.