Military Aviation Fleet & MRO Forecast April 6, 2016 Daniel Z. Katz Director, Defense Analysis and Data Aviation Week Intelligence and Data Services Arlington, VA Source: Aviation Week 2016 Fleet & MRO Forecasts Proprietary
Agenda Scope and Methodology Global Forecast Overview U.S. Forecast Overview Fighters Trainers and Light Fighters Air-Refueling Tankers Transports C4ISR Aircraft Maritime Aircraft Rotary-Wing Overview Source: Aviation Week 2016 Fleet & MRO Forecasts Proprietary 2
Scope All Western, piloted, military aircraft Military aircraft: Operated by a nation s military services, or Performing an inherently military function Notable Exclusions: CRAF, CAP, Intelligence Organizations Piloted: Unmanned Air Vehicles (UAVs) not included Western: aircraft families originally designed outside of the following regions/countries: Eurasia (Russia, Ukraine, Moldova, Belarus, the Caucasus and Central Asia) South Asia Iran China North Korea Counts are in-service aircraft only Source: Aviation Week 2016 Fleet & MRO Forecasts Proprietary 3
Forecast Methodology: Key Points Military Aircraft Database: In-service fleets + 10-yr. projections for deliveries/retirements, updated year-round. Demand-based, intelligence-driven, discrete approach. Sources: Aviation Week reporting; Reputable publications and periodicals; Government documents; Extensive primary research. MRO Cost Data: 20K+ datapoints, with thousands of recent actuals. Utilization, Field Mx salaries, Field Mx material costs and depot-level requirements for airframe, engines and 12 categories of components. MRO Algorithms, informed by trends and issues, combine with Fleet and MRO data to generate MRO Requirements. Data Cutoff: October 2015 MRO Cost Figures Fleet Projections Forecast Source: Aviation Week 2016 Fleet & MRO Forecasts Proprietary 4
Categorization Region North America Latin America and Caribbean Europe Middle East Eurasia Sub-Saharan Africa South Asia Asia-Pacific MRO Type Field Maintenance Airframe Depot Mx Engine Depot Mx Component Depot MX: Mission Avionics, Cockpit Systems, Landing Gear, Wheels and Brakes, APU, Dynamic Components, Hydraulics, Pneumatics, Fuel system, Electrical System, Other Source: Aviation Week 2016 Fleet & MRO Forecasts Proprietary
Mission Categorization Mission Category Mission Subcategories Bomber Fighter Trainer/Light Fighter Air Superiority, Multi-role, Attack, Electronic Attack, Multi-role (ship-based), flight Demonstration, Adversary Trainer Trainer; Light Attack; Trainer/Light Attack; Light Fighter; Adversary Trainer; Flight Demonstration Tanker Transport C4ISR Maritime General; VIP; Special Operations; Search and Rescue; Combat Search and Rescue; Medevac; Trainer; Target Tug Airborne Early Warning and Control; Ground Surveillance Radar; Imagery Intelligence; Signal/Electronic Intelligence; Measurement and Signature Intelligence; Multi-Intelligence; Light Observation; Command and Control; Communications Node; Psychological Operations; Border Surveillance; Electronic Attack; Electronic Warfare Trainer Search and Rescue; Reconnaissance; Surveillance; Patrol; Patrol (Anti-Submarine Warfare) Gunship Firefighter Flight Inspection Research Rotary Wing - Attack Rotary Wing - Scout Rotary Wing - Transport Rotary Wing - Maritime General; VIP; Special Operations; Search and Rescue; Combat Search and Rescue; Medevac; Trainer; Assault General; Anti-Submarine Warfare; Airborne Early Warning; Airborne Mine Countermeasures Rotary Wing - Electronic Warfare Rotary Wing - Firefighter Source: Aviation Week 2016 Fleet & MRO Forecasts Proprietary 6
Global Toplines Source: Aviation Week 2016 Fleet & MRO Forecasts Proprietary 7
Global Toplines: 2016-2025 $9.9B $12.0 B $5.9B $2.2B 2016 MRO Market by Region $1.3B $0.6B $0.2B $38.1 B North America Europe Asia-Pacific Middle East & North Africa Latin America South Asia Africa (sub-saharan) Eurasia In-Service Fleet: 40,695 in 2016 41,808 in 2025 MRO Annual Market: $70.2B $72.5B 40% Field, 60% Depot (17% Airframe, 7% Engine, 37% Components) Source: Aviation Week 2016 Fleet & MRO Forecasts Proprietary 8
Global Toplines: 2016-2025 Top 10 Aircraft Families by MRO Demand: 2016-2025 C-130 S-70 F-16 $ 49.0B $ 53.44B $53.39B F/A-18 F-15 $ 40.1B $37.6B C-135 CH-47 F-35 H-1 AH-64 $26.3B $24.8B $23.5B $22.3B $20.2B Source: Aviation Week 2016 Fleet & MRO Forecasts Proprietary 9
Global Toplines: 2016-2025 Top 10 Aircraft Manufacturers by In-Service Fleet: 2016 34% 13% 12% BOEING LOCKHEED-MARTIN SIKORSKY BELL HELICOPTER 10% AIRBUS BEECHCRAFT 2% 2% 3% 4% 5% 7% 8% NORTHROP GRUMMAN CESSNA DASSAULT MCDONNELL-DOUGLAS OTHERS Lockheed/Sikorsky = 22% of world fleet; Top four companies (US) = 43% of world fleet; Top ten companies = 66% of world fleet Source: Aviation Week 2016 Fleet & MRO Forecasts Proprietary 10
U.S. Military Fleet and MRO Projections Source: Aviation Week 2016 Fleet & MRO Forecasts Proprietary 11
U.S. Market Toplines 16,000 U.S. Aircraft In-Service Fleets by Mission Category: 2016-2025 14,000 12,000 10,000 8,000 6,000 4,000 2,000 Target Drone Gunship Research Bomber Maritime C4ISR Tanker Transport Trainer / Light Fighter Fighter Rotary Wing - Scout Rotary Wing - Electronic Warfare Rotary Wing - Maritime Rotary Wing - Attack Rotary Wing - Transport 0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 U.S. In-Service Fleet: 14,143 Aircraft in 2016 Source: Aviation Week 2016 Fleet & MRO Forecasts Proprietary 12
U.S. Market: MRO by Operator U.S. MRO Demand by Operator - 2016 UNITED STATES AIR FORCE UNITED STATES ARMY UNITED STATES NAVY UNITED STATES MARINE CORPS UNITED STATES SOCOM UNITED STATES COAST GUARD OTHERS $408.3 M $1.033.6 M $3,735.5 M $5,803.5 M $6,608.4 M $334.9 M $19,327 M MRO Market: $37.3B in 2016 $38.3B in 2025 $377B over 2016-2025, 53% of Global Total Source: Aviation Week 2016 Fleet & MRO Forecasts Proprietary 13
U.S. Market: MRO by Mission U.S. MRO Demand by Mission Category: 2016-2025 Mission Category 2016 Demand ($B) Fighter 10.855 Rotary Wing - Transport 7.527 Transport 5.320 Tanker 3.189 C4ISR 2.718 Bomber 1.817 Rotary Wing - Attack 1,838 Trainer / Light Fighter 1.157 Maritime 1,004 Rotary Wing - Maritime 0.993 Gunship 0.220 Rotary Wing - Scout 0.459 Research 0.108 Rotary Wing EW 0.030 Target Drone 0.015 Total 37.252 5% 5% 7% 9% 0% 1% 0% 0% 0% Fighter 3% Rotary Wing - Transport 3% 3% Transport Tanker C4ISR 29% Bomber Rotary Wing - Attack Trainer / Light Fighter Rotary Wing - Maritime Maritime 21% Gunship 14% Rotary Wing - Scout Research Source: Aviation Week 2016 Fleet & MRO Forecasts Proprietary 14
U.S. Market: Top Ten Families 45 Top 10 U.S. Aircraft Families by MRO Demand: 2016-2025 40 35 30 U.S. $ Billions 25 20 15 10 5 0 S-70 F/A-18 C-130 C-135 F-16 F-15 F-35 V-22 CH-47 C-17 Source: Aviation Week 2016 Fleet & MRO Forecasts Proprietary 15
U.S. Fighters 4,000 U.S. Fighter In-Service Fleets: 2016-2025 3,500 3,000 2,500 2,000 1,500 1,000 Mirage 3 A-6 Harrier F-22 A-10 F-15 F-35 F-16 F/A-18 500-2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Source: Aviation Week 2016 Fleet & MRO Forecasts Proprietary 16
U.S. Fighters FY14 OCPFH (Mx): F-15C/D: $38K ($25K) F-15E: $33K ($21K) F-16C: $21K ($13K) F/A-18: $23K ($13K) F-22: $53K ($40K) F-35A (est.): $34K ($15K) U.S $ Billions 35 30 25 20 15 10 5 0 Top 5 U.S. Fighter Families by MRO Demand: 2016-2025 F-18 F-16 F-15 F-35 F-22 MRO Market: $10.9B in 2016 Source: Aviation Week 2016 Fleet & MRO Forecasts Proprietary 17
U.S. Trainers & Light Fighters 1800 U.S. Trainer and Light Fighter In-Service Fleets: 2016-2025 1600 1400 1200 1000 800 600 400 200 OV-10 Alpha Jet T-34 MB339 A-4 DA40 SR20 DA20 T-X L-39 Hawk (T-45) T-38/F-5 T-6 0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Source: Aviation Week 2016 Fleet & MRO Forecasts Proprietary 18
U.S. Trainers & Light Fighters 7 Top 5 U.S. Trainer and Light Fighter Families by MRO Demand: 2016-2025 6 5 U.S. $ Billions 4 3 2 1 0 T-38/F-5 Hawk (T-45) T-6 L-39 T-X MRO Market: $1.23B in 2016 Source: Aviation Week 2016 Fleet & MRO Forecasts Proprietary 19
U.S. Tankers 600 U.S. Tanker In-Service Fleets: 2016-2025 500 400 300 200 KDC-10 KC-707 L-1011-500 KC-130 Legacy KC-130J KC-10A KC-46A KC-135T KC-135R 100 0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Source: Aviation Week 2016 Fleet & MRO Forecasts Proprietary 20
U.S. Tankers 18 U.S. Tankers by MRO Demand: 2016-2025 16 14 12 U.S. $ Billions 10 8 6 4 2 0 KC-135R KC-135T KC-46A KC-10A KC-130J KC-130 Legacy L-1011-500 KC-707 KDC-10 MRO Market: $3.2B in 2016 Source: Aviation Week 2016 Fleet & MRO Forecasts Proprietary 21
U.S. Transports 1,200 Top 10 U.S. Transport In-Service Fleets: 2016-2025 1,000 800 600 400 200 Learjet 35A (C-21) HC-130J T-44C MC-130J C-5M C-12 C-130J C-130H Beech 400 (T-1) C-17A 0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 In-Service Fleet: 1,402 1,396 Source: Aviation Week 2016 Fleet & MRO Forecasts Proprietary 22
U.S. Transports 25 Top 10 U.S. Transport Families by MRO Demand: 2016-2025 20 U.S. $ Billions 15 10 5 - C-130 C-17 C-5 King Air C-37 (G-V) T-1 (Beechjet) 737 (incl. C- 40) C-2 C-32 (757) C-21 (Learjet 35) MRO Market: $5.3B in 2016 Source: Aviation Week 2016 Fleet & MRO Forecasts Proprietary 23
U.S. C4ISR Aircraft 250 Top 10 U.S. C4ISR Aircraft In-Service Fleets: 2016-2025 200 150 100 50 RC-12X MC-12W EP-3 U-2 E-8C E-6B E-3G E-2C E-2C 2000 E-2D 0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 In-Service Fleet: 300 282 Source: Aviation Week 2016 Fleet & MRO Forecasts Proprietary 24
U.S. C4ISR Aircraft Top U.S. C4ISR Aircraft Families by MRO Demand: 2016-2025 9 8 7 6 U.S. $ Billions 5 4 3 2 1 0 MRO Market: $2.7B in 2016 Source: Aviation Week 2016 Fleet & MRO Forecasts Proprietary 25
U.S. Maritime Aircraft 250 U.S. Maritime Aircraft In-Service Fleets: 2016-2025 200 150 100 50 P-3B P-3 LRT P-3 AEW&C E-9A HC-130H HC-27J HC-130J HC-144 P-3C P-8A 0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 In-Service Fleet: 203 211 182 Source: Aviation Week 2016 Fleet & MRO Forecasts Proprietary 26
U.S. Maritime Aircraft 5000 4500 4000 3500 Top U.S. Maritime Aircraft Families by MRO Demand: 2016-2025 U.S. $ Millions 3000 2500 2000 1500 1000 500 0 P-8 P-3 HC-130H/J HC-144 HC-27 E-9 MRO Market: $1B in 2016 Source: Aviation Week 2016 Fleet & MRO Forecasts Proprietary 27
U.S. Rotary-Wing Fleet 6,000 Top 10 U.S. Rotary-Wing In-Service Fleets: 2016-2025 5,000 4,000 3,000 2,000 1,000 AH-64D AH-64E MV-22B CH-47F UH-72A (EC145) MH-60S MH-60R UH-60L UH-60M UH-60A 0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 In-Service Fleet: 6,320 6,312 Source: Aviation Week 2016 Fleet & MRO Forecasts Proprietary 28
U.S. Rotary-Wing Fleet 45 Top 5 U.S. Rotary-Wing Families by MRO Demand: 2016-2025 40 35 30 U.S. $ Billions 25 20 15 10 5 0 S-70/H-60 V-22 CH-47 AH-64 H-53 MRO Market: $9.1B in 2016 Source: Aviation Week 2016 Fleet & MRO Forecasts Proprietary 29
Thank You Source: Aviation Week 2016 Fleet & MRO Forecasts Proprietary 30