As the aviation industry continues its recovery and growth trajectory, the aftermarket sector, including Maintenance, Repair, and Overhaul (MRO) service providers and Original Equipment Manufacturers (OEMs), is poised for significant developments in the nearest future and beyond.
For MROs, the second half of the year will bring both challenges and growth. Demand for maintenance services is likely to continue increasing, driven by an expanding global fleet and heightened aircraft utilization. Airlines are flying their planes harder and longer, with global fleet utilization rates hitting 84%, up from 77% in 2021. More flights mean more wear and tear, and more wear and tear means skyrocketing demand for maintenance services.
The number of commercial aircraft in service is expected to grow steadily, with a surge in narrowbody aircraft, which will account for the largest share of the global fleet expansion. Global air passenger traffic surged by 20% in 2024 compared to the previous year, and it’s projected to grow another 15% until the end of 2025. Airlines are rushing to keep up with the demand, with over 28,000 commercial aircraft currently in service worldwide — a figure expected to reach 30,000 by 2027. Narrowbody jets lead the pack, making up nearly 60% of this fleet expansion.
On the positive side, MROs are leveraging advancements in technologies, which will allow them to be more proactive and efficient. The market is also benefiting from the rising need for component overhauls and repairs on older aircraft that have seen extended service due to delays in new aircraft deliveries.
MRO Performance in 2025
The challenges cannot be ignored. The shortage of parts remains a major concern. Material costs have surged, currently running approximately 8.3% higher than pre-pandemic inflation rates. This increase has put pressure on MROs to manage rising operational costs, and many are facing delays in receiving the necessary components, particularly for older aircraft models.
To put this into perspective: the cost of overhauling a single CFM56 engine, one of the most commonly used narrowbody powertrains, widely utilized in various variants, has jumped from $2.2 million in 2019 to nearly $2.7 million today. Even simple landing gear overhauls, which used to cost around $500,000 per set pre-pandemic, now average $620,000 due to labor and part shortages. And these are not just numbers. Unfortunately, they are the cold, hard realities that both MROs and OEMs face every day.
Parts shortages are one of the most pressing issues for MROs today. These shortages are intensified by supply chain disruptions and geopolitical tensions, which have caused delays in manufacturing and shipping. Parts like avionics, turbine blades, and landing gear are particularly hard to come by, and these shortages are expected to persist for the remainder of the year. For MROs, this means longer turnaround times for maintenance tasks, which could potentially disrupt flight schedules and add costs for operators.
Labor shortages also continue to be a thorn in the side of MROs. The aviation industry has faced significant labor attrition since the pandemic, and finding skilled mechanics and technicians remains a struggle. Last year, over 50% of MRO respondents reported frontline labor attrition rates of 5-10%, with the trend continuing well into the second part of this decade. This shortage has been worsened even further by the growing demand for more advanced skills, as technologies like AI and Internet of Things (IoT)-enabled systems are integrated into maintenance operations. MROs that fail to adapt to this technological shift by hiring and training workers with the necessary skills may find themselves at a competitive disadvantage.
OEMs, meanwhile, will continue to ride the wave of strong demand for new aircraft, though they too face hurdles. Despite production slowdowns caused by supply chain disruptions, manufacturers are ramping up their efforts to meet demand. For example, GE Aerospace has reported robust revenue growth, citing increased demand for engine components and aftermarket services. However, the company’s plans are tempered by supply chain challenges, as both raw material shortages and production delays have impacted their ability to meet delivery deadlines. Similarly, Airbus has been forced to offer financial assistance to its suppliers to support their production lines, which signals the extent of the ongoing difficulties OEMs face in securing enough components to meet customer demand.
Ongoing Backlog of Aircraft Orders
Airbus has set a bold but conservative aircraft delivery target for 2025 while also absorbing another blow to its space business, reflecting ongoing struggles with persistent supply chain issues. The aerospace giant has set its sights on delivering 820 commercial jets in 2025, which is a number, significantly lower than the 863 jets delivered in 2019, the final year before the pandemic severely disrupted the aviation industry.
For the full year, Airbus posted an adjusted operating profit of €5.35bn, slightly surpassing analyst expectations but down from 2023’s €5.84bn. Revenues rose by 6% to €69.2bn. Airbus delivered 766 aircraft in 2024, capping off the year with a flurry of deliveries, including a remarkable 123 in December. This effort secured its place as the world’s largest planemaker, beating US rival Boeing.
Despite the challenges, Airbus is still targeting a production rate of 75 narrowbody A320 jets per month. However, production of its widebody A350 and A220 aircraft is facing significant delays, mainly due to ongoing supply chain issues with US supplier Spirit AeroSystems.
In a further setback, Airbus announced a €300mn charge in the fourth quarter following a thorough review of its space programs, bringing the total space-related charge for the year to €1.3bn. Additionally, the company recorded a €121mn charge for its A400M military transport aircraft, raising concerns over the future of the program amid “uncertainties” regarding orders.
The backlog of aircraft orders remains a central concern for OEMs. With over 7,000 aircraft on order globally, delays in production have pushed deliveries further out. This extended wait time puts Original Equipment Manufacturers in a difficult position, as they must balance the growing demand for new aircraft with the capacity to produce them on time. As a result, the pressure to deliver both new aircraft and reliable aftermarket services will only intensify as the year progresses. Many airlines are finding themselves in a bind as they need to keep their aging fleets in service longer, resulting in increased demand for Original Equipment Manufacturers support in terms of overhauls and repairs.
Furthermore, while the push for additive manufacturing, also known as 3D printing, in aviation continues, it remains to be seen whether it can significantly alleviate part shortages in the short term. The technology shows great promise in terms of reducing lead times and manufacturing costs, but its widespread adoption in the aviation industry is still gaining momentum. For now, MROs and OEMs will need to focus on improving their traditional supply chains while investing in advanced manufacturing capabilities to meet growing demand.
Adapting to Challenges: What Lies Ahead
Looking to the rest of the year, the outlook for the aviation aftermarket sector remains positive but fraught with challenges. MROs will continue to experience high demand for their services as the global fleet expands, but they will need to contend with rising material costs, part shortages, and labor gaps. OEMs, for their part, are poised to benefit from strong demand for new aircraft and aftermarket services, but supply chain bottlenecks and production delays will continue to hamper their ability to meet initial delivery targets. To navigate these challenges, both MRO service providers and Original Equipment Manufacturers must remain agile, investing in technology, securing reliable supply chains, and addressing labor shortages to position themselves for success in an increasingly competitive and complex market.
Ultimately, the key to success in the remainder of the year lies in adaptability. As the aviation aftermarket sector continues to evolve, those who can innovate, overcome supply chain disruptions, and meet the rising demand for both new and refurbished parts will thrive. However, those who fail to adapt to the changing landscape will find themselves struggling to keep up with the pace of industry growth, as challenges in labor, materials, and part shortages will remain a persistent feature of the market.
