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Russian invasion casts a shadow over Europe's recovery | AviTrader MRO

26 May 2022

Conflict at Europe's borders has disrupted some supply chain flows. Keith Mwanalushi from AviTrader MRO spoke to AJW for some insight.

Read the full article here, or extracts below.

 

Keith Mwanalushi from Avitrader MRO writes: Ongoing geopolitical issues threaten to derail Europe’s fragile recovery but the MRO and aftermarket sectors remain resilient despite instability at the doorstep.

 

The Russian–Ukrainian conflict has created some disruptions in various areas of the MRO and supply chain sector, with operators based in both countries severely challenged by the supply of parts due to the sanctions imposed. Analysts at IBA have observed that airlines who have been unable to source or pay for spare parts will cannibalise aircraft to enable the continued operation of a smaller fleet and this trend will likely continue with Russian airlines as sanctions continue to bite.

 

With the sanctions in place on Russia, a report published last month by IBA suggested that the likely lack of access to spares is already having an impact on aircraft and engines at different stages of their maintenance cycle. Using IBA’s InsightIQ aviation intelligence platform, IBA can identify 72 western manufactured aircraft being operated in the Russian Federation which require 6/12 year or landing gear maintenance in 2022. As the report indicated, it is highly unlikely these maintenance operations will be completed without components that are restricted by sanctions.

 

Also, another report released by Cirium in May 2022 showed 67 western built commercial jet and turboprop aircraft parked at eight different airports within Ukraine – these will likely stay at these locations throughout the crisis and be exposed to the possible risk of damage. International operating lessor exposure does appear relatively limited according to the Cirium report. Only 23 of the 67 aircraft currently AOG in Ukraine are managed by 11 different lessors, with only four of those having more than one aircraft in country at present. During AerCap’s Q4 2021 earnings call CEO Aengus Kelly said in compliance with these sanctions, AerCap had terminated all aircraft and engine leases it had entered into with Russian entities.

 

Russian invasion casts a shadow over Europe's recovery | AviTrader MRO

On the impact from the Ukrainian and Russian conflict on the MRO and aftermarket supply chain in Europe, there have been some occurrences of suppliers identifying force majeure conditions for a small selection of specified repairs conducted in Russia, but Barry Swift, SVP Operations at AJW feels the impacts concerning MRO have been minimal thus far: “The biggest impact for the whole industry is the doubling in the cost of jet fuel which (as an airline’s first or second largest cost) will be placing additional pressure on older and less fuel-efficient aircraft and consequently accelerating retirements." The invasion of Ukraine certainly caused a spike in oil prices with brent crude reaching the $100 per barrel mark for a short period following the invasion.

 

Other regional challenges

 

In the wider European context and on the challenges facing the region, Swift from AJW observes that logistics lead times are driving greater regionality in MRO sourcing; “so OEM centres of excellence, say in the US, are sharing work with their European sister sites, to mitigate capacity constraints. There have been for example, raw material shortages around aluminium and other metals,” notes Swift. He adds that operators are focussed on managing their pandemic-induced debts and need cost-effective solutions to help keep their costs under control. “The need to be reactive, adaptable and flexible to meet operators' changing needs will remain for the foreseeable future.”

 

To further meet the demands of local European operators, last year AJW expanded its global MRO footprint with the opening of AJW Technique Europe, which operates as a centre of excellence for aircraft batteries and is set to expand into a series of other capabilities to compliment the repair services offered at AJW Technique in Canada. “We also added AJW Technique Interiors, with manufacturing facilities in Europe, offering new product lines to our capability list and helping airlines who need to refit cabins, replace seat coverings and carpets by reducing costs and supplying a superior alternative,” Swift enthused.

 

Read the full article here.

 

Find out more about AJW Group's supply chain solutions.

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