Markets and competition

Further growth in the MRO market

The recovery of global air traffic that initially continued in the first half of the year caused demand for technical MRO services to rise worldwide. The overall market for services to civilian aircraft grew year on year by around 4 per cent in 2011. Lufthansa Technik’s portfolio covers some 80 per cent of this market volume. At the same time, it is particularly important for the company to be present in the markets with the highest growth rates – Asia and South America – and to keep expanding successfully there. With its comprehensive product portfolio and worldwide presence, Lufthansa Technik was able to defend its position as global market leader to a certain extent with a market share of 14 per cent in the financial year 2011.

Lufthansa Technik’s main competitors include original equipment manufacturers (OEMs) such as Airbus, GE and Rockwell Collins, the MRO operations of other airlines like Air France-KLM, and independent suppliers (e.g. ST AERO, SR Technics). The OEMs in particular are moving into the MRO market, as well as an increasing number of smaller independent companies that concentrate on supplying components and engines, and purchase repair services as required. This capital-intensive production model enables a rapid market entry and results in new competitors. Altogether, these trends are leading to a much greater supply of MRO services, which increases pricing pressure and competition for new contracts. Lufthansa Technik will continue to highlight its differentiating features, such as quality, turnaround time and punctuality, to develop innovative new products and to optimise its group management and cost base. This is the background to ESP@LHT, the programme to safeguard earnings and secure competitiveness at Lufthansa Technik that was launched in June. The programme covers both cost-cutting and sales activities to stabilise the earnings situation.

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