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2026.10.06 | TB | Aerospace | Aircraft MRO & StandardAero Expert

原标题：Aircraft MRO Space & StandardAero – Former Senior Executive, Global Sales, Marketing & Business Development at StandardAero Aviation Holdings Inc

#industrials #transport

Third Bridge · 2026-10-06

Client-led • 25 Sep 2026

Companies: SARO US, RR. GB, GE US

Expert Former Senior Executive, Global Sales, Marketing & Business Development at StandardAero Aviation Holdings Inc

Agenda

Introduction

Client [00:01:32]: I'm trying to understand StandardAero and the engine MRO [maintenance, repair and overhaul] space. We'd appreciate your insights into StandardAero, its industry position and how the business works.

Expert [00:02:23]: It is important to know StandardAero is about a 115-year-old company. It comprises an organisation that is solely focused around propulsion engines. They do have different variations in some of the sectors, but holistically, it is engine component repair and overhaul. Then there is military and helicopter division. Finally, the business and general aviation space, and that is where it gets a little murky because they provide additional services that is unique to StandardAero's portfolio, meaning paint, avionics upgrades, interiors on private business jets and things of that nature. So that is the organisation view at a high level that I think is interesting and relevant for today's discussion.

Questions

00:04:30] StandardAero is organised by engine-type end markets for three divisions. Does the component repair division repair components for military, general, business and commercial aviation, or only commercial aviation?

Expert [00:04:53]: You got it. You decked it. They do it all. But the lion's share of component repair and overhaul services is for large commercial propulsion engines like the CFM56. They are coming online really strong with the LEAP component repair and overhaul. I think at current, they are clocking almost 500 repair and overhaul scenarios in components, and that is substantial and significant from a profitability perspective, but also the throughput that the engine sectors can perform in. Because when they develop those repairs, they are less reliant or not reliant at all on the OEM. So they get to feed their engine lines faster and cheaper. So it is a growth engine, it is a growth machine that is really attractive to many people in the space for that reason.

Client [00:05:55]: The component repair business seems a great business for a few reasons. You have a large price umbrella because the OEM new parts are so expensive that even at a significant discount to that, you can earn good returns. Then, probably more importantly, from the customer perspective, especially in moments when there is a shortage of OEM parts, the ability to repair parts can significantly speed up the shop visit or reduce the shop visit time, which can reduce time on the ground. It seems to be a great business. Is that right?

Expert [00:06:43]: You nailed that one, too. The one thing that I would add is that the component repair and overhaul business. So if I am looking at margins anywhere from 7-12% from a profit perspective on large turbofan engines, what you should know is that the component repair and overhaul portion of that usually, to the third-party markets, to the end markets. So it is highly lucrative to be in that component repair and overhaul space.

00:07:21] Could you discuss engine services? How many engine shops were focused on the commercial engine services business? Where are they? What were the big engines? There is a CF34-focused shop in Canada, and that seems to be a big business. The same shop did some CFM56, but now it's building out a new facility for that. LEAP is up and running. What were some of the other big engines, and where were the facilities for such engines? The company has talked down how big the RB211 is now. What are your thoughts on that?

Expert [00:08:34]: I will tell you a bit of a story. StandardAero was predominantly a turboprop shop, PT6, PW100s, a series of APUs and smaller shops. Then they grew up into the fan space, and fans are known as AE3007, powering the Embraer 145. Then they got into the CF34-3 and -8 space, which power the CRJ platform, effectively the CRJ200s, 700s and 900s. They are known as a, I would say, COE, centre of excellence, for that product suite. But then because StandardAero's niche is being OEM-affiliated and paying substantial OEM licence fees, the OEM really likes from a sense of an extended service level to the market, which is great.

Then, in 2008 or 2009, there was a tri-party deal done with WestJet between WestJet, GE and StandardAero, where they started working on a CFM56. So you can see the progression from the GE engine of the CF34 to the CFM56, and then finally, the holy grail and the future of aviation is the LEAP that we will talk about in a little while. The CFM56, I would say it struggled a bit from a market. The CFM56 powers the 737s, as you know, not the MAX, but the 700s, 800s and 900s. It was, up until the advent of the LEAP, arguably the most popular engine ever manufactured for single-aisle propulsion. Everybody wanted a bite at the apple.

But Winnipeg struggled with that a little bit from a proximity standpoint to its customers, and from a field service-level technician to and through the North American market, predominantly the US. So in 2022, we bought a company called Dallas Airmotive, which is a very interesting and strategic play because what happened is that we have a facility that has six test cells, and the money is in the test cells. You buy businesses in this space because they have a test cell, or they have a test cell built, and it requires certification. So it is not to say that they don't do any CFM56s in Winnipeg anymore. They do some, but very few.

00:12:05] It seems like there is a scale economy. There is obviously a learning curve for doing some engines. Probably, it doesn't make sense for an engine shop to be a Jack in the Box, the restaurant where they can serve any type of food, because then you will be doing, say, 10 overhauls of 50 different engines, which is the wrong way to do things because of the learning curve. Instead, you want a centre of excellence is, and you build up a centre of gravity in doing one type of engine. It seems like the Dallas acquisition was a trade, where they moved the turboprop and turbofan aspects from there to Winnipeg and then moved the CFM56 aspects from Winnipeg to Dallas. Thus, you have more pure-play specialisation. Is that how one should think about it?

Expert [00:13:25]: You want your workforce to be conditioned with consistency. The shop floor layout, the flow design was all consistent with one another from a flow perspective, first in, first out, but then it was segregated by engine type. So, there was cross-training involved. I could take one technician who was a master tech on, let's say, for example, a TFE731, and then train him on another product line. But you are right in the sense that the Jack in the Box thing does not wash out because it is too much disruption and too much inconsistent training.

Client [00:14:15]: StandardAero has Winnipeg and Dallas on the commercial side. Does it work on LEAP in San Antonio?

Expert [00:14:25]: So I did not answer one of your questions, I apologise. You are right. I could talk to each and every shop around the globe in detail. The RB211 is a sunset programme. We inked that deal for an end-of-life solution for the RB211 from Rolls-Royce, which is a very noisy and dramatic story, but that is housed and done in San Antonio, and that is in a parallel line where the LEAP is. The only thing that matters to the company is the future, is the LEAP. I mean anecdotally. You have LEAP first, then CFM56, then CF34 and then everything else is glitz, a little bit of noise and disruption. It does not mean that it is not important. It is just that there is so much opportunity by way of volume and also by way of profit that if anybody stands in the way of, say, for example, the LEAP or the CFM, they are going to get rolled over like a freight train. So that is the way I would frame it.

Now, I will give you a walk around the block a little bit. So we will start in North America. North America, we talked about San Antonio. We also talked about DFW. DFW is a combination of CFM56 and a host of business generalisation aircraft, primarily small turbofans, TFE731, HTF7000 and so forth. Then going south, there is a small turboprop shop in South America and also turboprop shops in Gonesse, France. So think of PT6 and PW100s. The next part of this conversation focuses on the turboprop shops, which carries a high volume. It is well over USD 1.5bn in revenue per annum. But you have South America in Brazil, then you have Johannesburg, South Africa, a small shop there. Another one is Brisbane, Australia. Then finally, coming around the globe, you have a shop in Singapore, primarily an offload shop for Pratt & Whitney. There are a couple of engines that I cannot think of the name of them off the top of my head.

Then finally, get back to France. Gonesse, France, which was an acquisition that occurred in 2017 when StandardAero purchased Vector Aerospace. It put us on the map globally from a Singaporean footprint, as well as from a European footprint in Gonesse, France. Then coming all the way across the pond again, the COE for that prop shop, or for the propulsion propeller line, which is PW100s powering the ATR 72s, and then the PT6 hosting aircraft like the King Air, Pilatus and so forth. That in PEI, Canada is the centre of excellence for all of those prop shops around the world, and that is the anchor. So the drumbeat comes from PEI, Canada when it comes to the propeller shops, and they do a very good job and have more market share than that of the OEM.

The last part, to answer your question a while ago, is what other Rolls-Royce engines? There are none. Other than a few turbofans, I mean, there are no big commercial single aisle or twin aisle engines from Rolls-Royce in the portfolio as it stands today. Quite honestly, given the challenges of the Trent 1000, Trent 700 and so forth, I would not think that they would touch that with a 10-foot pole. Not to mention the challenges that we had industrialising the RB211 in San Antonio. It was not for the faint of heart. I do not think anybody would do it again. A lot of headwinds that we resolved, that we faced.

00:19:10] It is interesting because the business seems quite organised around turboprops. You lump them together. Isn't ATR a commercial product? The PW100 is going to airlines, whereas Pilatus and King Air fall under general aviation. Is that correct?

Expert [00:19:43]: It is a good observation. You are sharp on this. So, it is a good observation because when you are trying to define organisational clarity and you say, "Okay, we are going to focus on these end markets," meaning the individual operators or individual Part 145s and FBOs, and then you say, "But we are also going to service small airlines like Silver Airways or ATR-powered aircraft." Guys are going, "Well, hey, what does good look like, and where is the continuity?" The continuity comes, and the short answer is that I tie it back to the test cells. You are looking for test cells that have consistent thrust ratios within a certain parameter box. So, if I have a 10,000 shaft horsepower thrust engine, but I have a test cell that is capable of going up to 18,000 foot pounds of thrust, then I could arguably make a solution for not only the PT6, but at the same time, doing the PW100s. So that is the test cell's limiting factor or the complementary factor, and that is the reason that they are in the same bucket.

00:20:59] Regarding StandardAero's organisation, were the turboprops under general aviation and business, or were some of them under commercial engine services?

Expert [00:21:11]: Business development, think of them as the police between a reckless salesperson and a good balance of finance. It is much more complex because you are doing multi-billion-dollar deals vs a USD 500,000 deal. Those turboprop jobs are arguably much more transactional than that of a longer-term multi-engine contract like the LEAP or CFM, because there you are playing with big money, long-term commitments and long-term contracts that are laden with penalties for non-performance should you fail or should there be a challenge.

00:22:31] Were things around King Air, which is technically general aviation, organised under commercial at StandardAero?

Expert [00:22:45]: Yeah, it is. My understanding is that they made a change there.

00:26:04] Could you explain the commercial process? How does an RFP [request for proposal] with an airline work? How much of the sales go through RFPs vs other processes? How long are the agreements?

Expert [00:26:28]: I am going to generalise this from a fan perspective first. So every time an airline is going to let an RFP out to a host of competitors. So think of, and it is always my 5-10 favourite friends. It is Lufthansa Technik, it is SR Technics, MTU and StandardAero is in the mix. Meanwhile, you are also competing with the OEM, because if the OEM wants it, if there is, what the OEM likes is that continuity. They want a large airline. They want the biggest of the big boutique brand names, because it promotes their product and the airline affiliation associated with being tethered to the OEMs. The challenge is that what is left, effectively, in layman's terms, are scraps. Smaller airlines, ULCCs they are called, ultra-low-cost carriers, which come with more risk, worse credit profile and things of that nature. It does not mean that we do not get some great customers, but largely, if GE wants it or CFM wants it, they can drop the margins on their parts because they control the margins because they are the OEM, and that creates an inherent tension. It will go through a gate process or a bid review. So it will be pitched by the salesperson to a committee.

At that point, if the gate approval was met and we said, "Okay, go forward," it gets turned over to business development to do the financial architecture, answer all the contract Ts and Cs and so forth in order for and to enable the salesperson to then submit it direct to the customer and/or get submitted through a portal if it is at a larger, sophisticated airline. Once the airline gets it back in one of those two forms or fashions, then they are going to spend probably the next 30-60 days analysing all the bids and doing a cross-reference from a risk tolerance. Who is more competitive, who took on the greatest amount of penalties, who was willing to be the cheapest price, who committed to specific turnarounds and so on and so forth. Then they will make their decision. Once the decision is made, then it comes back to the victor, then it goes to contracts. There is a couple of different things. If it is a multi-year contract, it will get scrutinised and reviewed. If it is a transactional, singular type of opportunity, that will also get reviewed, but it is much faster and easier. Then finally, once it is contracted, then there is, depending upon the pomp and circumstance, there is usually a press release for the branding perspective

Client [00:29:56]: Regarding the division's sales, is 90% of the commercial services long-term contracts? What is the mix between multi-year contracts and transactional from a sales perspective?

Expert [00:30:16]: Depending upon the engine, I would say, in generality, it is probably 60/40, 60% transactional, 40% LTA.

Client [00:30:27]: Is it mainly transactional?

Expert [00:30:31]: Correct.

00:30:39] How big is a transactional bundle? Is this per shop visit, or is this a package of 20 shop visits?

Expert [00:30:54]: No, typically per shop, because it is a singular to maybe three. A large transactional bucket would be multi-year for three to 10. Then, the larger long-term agreements, the LTAs, those could be USD 1bn, 50 engines over a five-year term, or sometimes for 10-year terms. But 10-year terms, when airlines let those out, scare everybody, primarily because nobody knows what the landscape is going to look like in 10 years. So you have to hedge a lot and build in a lot of risk and caveats to protect not only the integrity of the bid but also the overall enterprise from risk profile.

00:31:44] Do airlines do an RFP for every single shop visit?

Expert [00:31:56]: No, only the smaller airlines do the singular shop visit RFPs. More commonly, for large fleet operators, they are going to let out an RFP, and then typically and historically, let's say, for example, they are looking to have 50 engines repaired. They have, of the 10 suitors, maybe three of them will be like-for-like as far as competitive landscape. Then, what the airline has the historical tendency to do is to split the baby and say, "I am going to send 20 engines to this operator, 20 engines to this," or, sorry, 20 here, 20 there and 10 here. Then, in that same contract, there is going to be caveat language that says, "But I reserve the right, it is a non-exclusive relationship, and I reserve the right to go down the path of a performance-based player." So if one MRO is sucking wind from a turn time perspective, or they have a challenge from a quality perspective, they are going to shift that volume over to whoever is performing best. So, it is really a performance-based solution, but that is the right way to think about that.

00:33:05] If 60% is transactional, some of that would be performance-based wins on an engine basis. Could you explain the transactional business? Are those smaller airlines doing single-visit RFPs? Do you ever have small airlines that don't bother with an RFP? Do they send it to you each time since you are their go-to shop for engines? Do they always shop?

Expert [00:33:33]: Not typically. Anytime somebody is playing with that type of money, they are going to sweat their supply chain and say, "Hey, go get me the best bang for the buck." I wish the landscape was common where I performed well for an operator in the past and they just send me an annuity, engine after engine after engine. But that rarely happens, unless you have that LTA in place, that long-term agreement.

00:34:18] Different engine shops dominate different programmes. Regarding turboprops, where StandardAero has market share, a share more dominant than Pratt & Whitney, that seems slightly inconsistent in some ways with every shop visit going out to a competitive RFP. It is clearly doing something right or has some advantage if it has 60% market share. What do turboprops' sales processes look like? Is it the same process where you won 60% of the RFPs?

Expert [00:35:18]: No. What I described prior was primarily in the fan space and the RFP process that is associated with that, just because of the dollars. On the prop side, it is a much stickier, close-knit operator community where they are looking for indicative pricing. It is lower dollars, so there is less risk. Sometimes there is an RFP, but often cases, you are just responding to general terms and conditions to a specific customer. You will commit to a flat rate or a fixed firm price, and then you are off to the races. It is much more streamlined and less sophisticated.

00:36:10] Over time, for some legacy engines, you get dynamics similar to turboprops. Maybe it is happening with the RB211s. StandardAero is hoping it will happen with the CF34, where the total shop visits decline, thus making less sense for there to be eight MRO [maintenance, repair and overhaul] shops that do it. The number of shops will gradually decline to end up in a situation where StandardAero is on the turboprop side with a dominant market share in a certain engine. Has that happened on the commercial side, or is that more related to turboprops? If it does happen, how do the RFP dynamics change?

Expert [00:37:10]: So as an engine ages, a couple of things happen. Everybody wants to work on the new shiny penny, call it the LEAP and so forth. So what you are seeing in the CF34 perspective, -3s and -8s, is that it is no longer really relevant or common for. Not common. It is not the hot topic for GE. So they are looking to their legacy programmes, and that is where you see a shift more towards StandardAero and a consolidation in the market where StandardAero has got a substantial amount of market share. It does not mean that GE will not work on them. It just means that it is not as attractive to them as it once was, especially with all the churn and noise going on in the commercial single-aisle market with the 737 MAX and the A320neo. So, that is the evolution. So I guess to paraphrase, as an engine gets older, there are less players on the field because there is a consolidation, and there are these centres of excellence that are very difficult to compete in the space that you once did.

Client [00:39:05]: How does that impact profitability? Is that much more profitable for StandardAero because it has a cost advantage now?

Expert [00:39:19]: Absolutely, and just one caveat here. So as there is more consolidation, it is more difficult to compete against those centres of excellence because they are doing two things. One, they are doing consistent work scopes over time. But two, and in parallel, they are developing more part repairs. So therefore, they can provide greater price elasticity to the customer and better economics than anybody else in the space.

Client [00:40:20]: They are developing more part repairs, and they are doing more consistent work scopes. I will ask a question on this, and then I would love to hear more about the bidding and the price elasticity and all that.

00:40:20] Regarding the more consistent work scopes, for a CF34, since it is in the centre of excellence and you have so many representatives, you can do a typical overhaul in 100 hours. It might take a competitor X, that does one-fifth of that engine's volume, 140 hours to do an overhaul because it is not down the learning curve. Is there any rule of thumb for quantifying the advantage of the consistent work scope piece?

Expert [00:41:35]: That is a difficult question to answer, really. But I would say it is predicated on two things. One is, what is the number of labour hours go into a specific engine shop visit? Then you look at how much annual volume is being handled by that shop and compare it to somebody else. So, on the prop side, we were often compared to Covington. Covington was a drop in the bucket by way of size and by way of volume. But they were faster in turn times. They were faster in turn times because they had a better parts flow because they used PMA parts, and PMA come with better economics because those are aftermarket parts, not OEM parts. So where we would say, "Hey, you do not want to Frankenstein your engine. We will not use PMA parts. Our turn times are going to be a little bit higher, but in theory, not in theory, but in practice and theory, you are getting a better quality engine because they are all OEM parts and OEM-authorised repairs." So that is a decision that the customer had to make on their own. Which often, as I said, came more favourable. But I would struggle to quantify or answer your question.

00:42:55] Sometimes, there are industry-wide rules of thumb where people would say that you tend to have a 10% advantage. That is not the case for such things. How do you even know how long it takes? It seems that no engine MRO or engine repair is the same. How do you even do an apples-to-apples comparison?

Expert [00:43:19]: If you look at the CF34, though, for example, that is proofed out. That is proofed out exactly because you have that continuity, you have so much volume. Call it, let us say, for example, 250 shop visits per year going through with the same work scope. It is rinse and repeat. It is black and white. The workforce is getting better. There is labour utilisation, there is hurdle rates, parameters and then there are a substantial amount of lean process improvements that get deployed. Where can we get better? One of which is COPQ, cost of poor quality. If you have a COPQ budget, let's say, for example, USD 1m a year, and you blow it, you double that is a hit to the bottom line right away. So that is a perfect example of why you would deploy a lean initiative to prevent and drive down that COPQ metric. Because you do not want anybody dropping a part in the wrong vat, that is maybe corrosive to one part, but it is good for another. If a technician messes something up and scraps a part, a turbine disc, a turbine wheel or something like that is an opportunity for improvement. So where I am going with all this is that the more volume you do, the more efficient you become. I would struggle to say, to use a figure like 10% or anything. Yeah, quantify it.

00:44:46] You mentioned that you might be looking at 7-12% margins for large commercial fans on the engine service side, which has done 13-14% EBITDA margins for the last three years. It might be earning higher margins on the non-large commercial fan size, the military, business jets and turboprops. The dynamics may have changed. Could you explain that large commercial fan margin? Is that just on the labour? How do the OEM parts factor, not the repair parts, factor into that?

Expert [00:45:52]: The public information that they shared is more of a blended average across an aggregate. So they are taking some high risk, some high margins and they are sharing an average. But the way that they get there is through the use of part repair economics that increase the profitability. That is thing one.

Client [00:46:16]: It has two divisions, and they split. Its component repair (audio distorts) break it into a separate reporting division. The engine service piece doesn't include the component repair margins. Is it just the MRO and the OEM parts?

Expert [00:46:42]: Correct. I agree.

Client [00:46:46]: Are the margins on the engine services piece flattered by the component repair division in some way?

Expert [00:46:55]: They are, absolutely, because the more efficient that the component repair and overhaul division becomes with those part repairs, those economics get enjoyed by engine services, right? So they do not have to go buy those parts from the OEM. So the better they perform and the more parts that are developed, the engine services division gets to enjoy, and it actually sees higher margins than originally anticipated.

Client [00:47:33]: Component repairs can earn 30% margins, and the engine service side is also earning some margins on that. Is that correct?

Expert [00:47:43]: Yeah, they will have a structure. They are still paying CRO, component repair and overhaul, for their services, just not at the large degree that they would charge to a third-party market. It is family money. So they don't gouge their brother or sister in adjacent division.

Client [00:48:05]: Thus, it is earning a margin on that, and the margin on what is sold to engine service may be shared between the two divisions in some way. Is that right?

Expert [00:48:24]: You got it.

Client [00:48:26]: You mentioned another important piece of margin drivers here. Could you elaborate on that?

Expert [00:48:35]: I was saying, I am not sure, but what I was trying to articulate was that there is associated benefits with USM, used serviceable material. So, think of, used serviceable material is still OEM product, but it is effectively used hardware that has been reconditioned or recertified. So think about it like this, in layman's terms. If I need a hood for my 2023 Toyota Camry, and I need to go buy one from Toyota, I am going to pay said price, say, for example, USD 1,500. But if I want a factory hood that just needs to be painted, I can go get a factory hood from a junkyard that is in decent shape with suboar paint it for USD 200, return it to service and put it back on the car. It is going to meet the same fit, form and function. That is, by definition, what USM is. So that has two benefits. One, it provides the operator with greater economics and a cheaper price on the surface, and two, StandardAero gets to enjoy greater profitability because they do not have to pay the OEM for those parts.

00:50:02] I am assuming that an engine where you have 60% market share has better margins from repairs than an engine where you have 10-20% market share. If that's true, how much of that engine benefit is from a lot of repairs and used benefits, giving us a cost benefit owing to the 60% market share vs heavily reducing prices when competing with six players for an RFP and lightly reducing prices when competing with three players? It may be a more attractive pricing environment.

Expert [00:51:55]: That is an interesting element, because if you look at what is going on with the LEAP, for example, there are not a lot of players on the field. There are only a certain number of CBSA premier shops out there – StandardAero, MTU and SR Technics, really. So which creates an illusion, if you will, of price pressure, or that there is an ability to charge customers more, when in fact, everybody is bidding against the same RFP, so you still have to be strategically aggressive. But when you have a COE, which StandardAero is not a COE for the LEAP yet, but they will get there at some point. But if I use the COE parameters for the CF34 engine, that is where you can arguably gain more price because you have better economics, you have more volume, you have better benefits for part repairs and you are obviously a more attractive shop by notoriety and brand recognition. Same thing with the PT6. So difficult for me to quantify a specific figure, but in general, that is the way that I would think about that.

00:57:27] StandardAero's financial performance seems good. The 13% EBITDA margin for engine service is healthy, component repair is close to 30%, and it seems that there is a good growth outlook for this business. The return on capital is quite attractive. It feels incongruent with my initial understanding that there aren't many barriers to entry. You have to pay the OEMs to get a licence. It is akin to a mechanic shop. It is parts and labour, and it is a much lower-quality business than being CFM, where you own the IP and can raise prices because you are the only player in town. Why are new players not entering the engine MRO space if you can get attractive financial returns? There may be some barriers to entry. On the surface, it seems if you can afford a test cell and a licence from GE, then you can start up this business and compete. However, in practice, we aren't seeing that. What are your thoughts on that?

Expert [00:59:20]: Short answer is this. Test cells are painfully expensive, and they are very rare. So it is all about whoever has test cells existing in brownfield, not greenfield. If somebody comes out and says, "Hey, I am going to develop a test cell in 2-5 years," double that time and they better have the stomach and the balance sheet for it.