Air France 2009 Annual Report Download - page 41

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A market dependent on fleet
trends
Whereas the European MRO players were
penalized by dollar weakness relative to the
euro, the market continued to grow in emerging
countries, driven by the age of the fleets in
service which require maintenance and
overhaul. One additional factor contributed to
containing the decline in the so-called open
market: a confirmed trend towards increased
outsourcing and functions not directly linked to
operators’ core businesses. Furthermore, the
operational fleet of next-generation aircraft
continued to grow by more than 10% over the
course of the year, and specifically Airbus
A320s and A330/340s and Boeing B737-NGs
and B777s, aircraft on which Air France
Industries (AFI) and KLM Engineering &
Maintenance (KLM E&M) are particularly well
positioned, delaying the impact of the
economic recession on the Group’s third-party
client activity, with the exception of cargo
clients.
Environment
The global MRO (Maintenance, Repair,
Overhaul) market, constituting the direct or
outsourced expenditure by aircraft operators on
maintenance and modification, is estimated
at $44 billion in 2008. It closely follows the trend
in the global commercial fleets and is impacted
by changes in the older-generation fleets. In
early 2008, the rise in the oil price resulted in the
grounding of an increased number of older-
generation aircraft. At the end of the year,
despite the fall in the oil price, few of these
aircraft had been brought back into service
given the global economic recession and the fall
in both passenger and cargo traffic. The decline
in global MRO spending in 2008 is thus
evaluated at 2%.
A look back
at the year
Jacques-Olivier Vallet:
How are you responding to
tougher competion from both
independent operators and
aeronautics OEMs?
Our response to this competition is based
on two strategic priorities. Firstly, an
improvement in our performance and a
reduction in our costs in minimizing, for
an equivalent level of quality, the cost of
heavy airframe overhaul and in containing
the increase in the cost of components
and materials. Secondly, growing our client
portfolio in valued-added component and
engine support services. On component
support (braking and landing systems,
for example), we are increasing physical
proximity to the client and our commercial
responsiveness: adapting and improving
the performance of the logistics network
and establishing local operations in new
markets. In engine support, we intend to
increasingly exploit the scale effects offered
by our industrial capacity.
900 aircraft handled
4% of the Group’s revenues
No.2 ranking amongst the global
multi-product players
Maintenance
In addition to the services
provided to the Group’s fleets,
one third of the maintenance
activity is realized with third-
party clients.
39
Air-France KLM - Annual report 2008-09