Entry into the North American
market of aviation MRO

The company was one of the largest aviation MRO service providers globally, with $800 million sales. With net profits at 0.6%, annual growth had slowed down to 1% as the industry was downsizing and restructuring. The business comprised four P&L lines, including engines, wide bodies, narrow bodies, and components. Management needed to improve profitability and reposition the business for growth.

As part of a comprehensive strategic plan for the four P&L lines, identified the opportunity to enter the North American market

  • Establish a maintenance hub in Miami as an optimal logistical location to serve the continent
  • Extend service to international carrier customers needing assistance in the Americas
  • Offer components maintenance in North America at the same level of quality as in the European home market
  • Take advantage of natural segment growth of 8% per year
  • Follow up entry with local acquisitions to round out the service line

We performed a comprehensive analysis of the company’s cost structure by product line, their respective market demand, and its competitive position in each as follows:

 

• Analyzed product line profitability to measure net margins, including the following product lines:

  • Wide-body checks
    • Boeing 747-D
    • Boeing 747 Cargo-D
    • Airbus 300-D
    • Airbus 310-D
  • Narrow-body checks
    • Boeing 727-D
    • Boeing 737-D
    • Airbus 320-IL/C
    • Boeing 7373-IL
    • Airbus 320-IL
  • Component repairs
    • Avionics
    • Pneumatics
    • Electro-mechanical equipment
    • Hydraulics

 

• Estimated demand for each product line by the following market segments:

  • Regions
    • North America
    • Europe
    • Asia
    • Africa
  • Type of carrier
    • National
    • Major
    • Captive
    • Other

 

• Conducted a detailed analysis of competitors by product line, including

  • Type of competitor
    • Third-party airlines
    • Independent shops
  • Competitive position
    • Market share
    • Relative cost position
    • Financial strength

Results indicated an opportunity to enter the North American market in Components Maintenance i. The company’s international carrier customers were underserved in this service, projected to grow at 8% annually.