Despite posting a strong performance for 2008, Lufthansa Technik is bracing for the downturn to last until 2010 with ramifications into 2011 and beyond.
Although Lufthansa Technik closed €3 billion ($3.8 billion) in new deals over the last year, it is warning that the economic crisis is going to have a strong impact on the MRO industry.
Speaking during an interview with staff newsletter Lufthansa Technik News, Lufthansa Technik senior vice-president for marketing and sales Walter Heerdt described the firm's portfolio and regional presence as being "in good shape", but cautioned that traffic, aircraft utilisation and fleet sizes were declining.
"Older aircraft or ones which are due for an overhaul will be the first to be parked. This will have an additional negative effect on the MRO market, as new aircraft require less maintenance than older ones," says Heerdt.
"Another sign of the crisis is the deterioration in payment performance and an increasingly pronounced inclination to pass any risk onto the MRO provider."
He warns that reducing flying programmes will lead to weaker demand for MRO services from existing customers. This will place greater pressure on securing new business to maintain capacity utilisation, but he concedes that the challenging environment will make it harder to hit growth targets.
"We anticipate that this difficult environment will continue into 2010," he says. "Starting in 2011, we expect the market to return to modest growth. We are assuming that, depending on the depth and length of the crisis, its effects will continue to be felt after 2011."
To counter the downward trend Heerdt says Lufthansa Technik will keep a close eye on its customer payment performance and increase its sales by offering a competitive and reliable product.
Source: Air Transport Intelligence news
