- Spirit, Honeywell and Boeing reach deals at Airshow China
- Chinese MRO market to be 8% larger in 2021 than in 2019-Oliver Wyman
- Service agreements allow manufacturers to gain a foothold for decades
ZHUHAI, Sept. 30 (Reuters) – Western aircraft maintenance, repair and overhaul (MRO) suppliers signed a series of new contracts with Chinese customers and joint venture partners at the world’s largest trade fair this week aeronautics industry in order to strengthen their presence in the lucrative market.
The rapid rebound in traffic in China’s domestic aviation market to pre-COVID levels, coupled with large declines in other parts of the world, has made China even more important to suppliers trying to downplay income generated by the pandemic.
“China is the key to the future of aerospace because the center of gravity of passenger traffic is shifting east,” said Kailash Krishnaswamy, general manager of Spirit AeroSystems (SPR.N) China, in margin of Airshow China in Zhuhai after signing a 10 year repair contract with freight carrier SF Airlines. Spirit was attending the show for the first time.
Consulting firm Oliver Wyman estimates China’s MRO market will be 8% larger this year than in 2019, making it one of two regions to surpass pre-pandemic levels, alongside l ‘Eastern Europe. By 2031, he predicts that the MRO market in China will more than double its pre-COVID size to nearly $ 20 billion annually.
Honeywell International (HON.O) is a major supplier to the Commercial Aircraft Corp of China (COMAC) C919 narrow-body program and is bidding for work on the Sino-Russian widebody CR929, said its Chinese president, Steve Lien.
Such agreements give it a foundation for the future when maintenance is needed. Honeywell this week signed an interim agreement to provide MRO services for its C919 auxiliary power units with the aircraft’s first customer, China Eastern Airlines (600115.SS), and said it plans to sign additional carriers while COMAC is stepping up production.
Like Spirit, he also sees good prospects in the freight market, which is growing rapidly with the rise of e-commerce and typically uses older aircraft that require more maintenance than the latest generation of jets.
“The forecast for freight is very strong,” Lien said. “China’s freight capacity is not as mature globally as it is in the United States and Europe. But it is in the national interest to mature it.”
Boeing Co (BA.N) and Guangzhou Aircraft Maintenance Engineering Co Ltd (GAMECO) signed an agreement at the show to set up two conversion lines of 767 freighters next year. Read more
Chinese airlines will need 8,700 new planes through 2040 worth $ 1.47 trillion at list price, Boeing said in a forecast last week. Read more
At a time when China is increasingly focusing on local aircraft production, Boeing China President Sherry Carbary said her company’s strength in services was essential for it to gain a foothold in the long-term market.
“These are the services that really support this aircraft throughout its life, for the next 20, 30, 40 years,” Carbary said. “So it’s not a one-off sale. It’s a lifelong relationship that’s very important to us.”
Reporting by Stella Qiu and David Kirton in Zhuhai; additional reporting and writing by Jamie Freed in Sydney. Editing by Gerry Doyle
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