Maintenance, Repair and Overhaul (MRO) Market & Current Trends in the Sector by Risto Mäeots, CEO

Agenda MRO business and regulations State of the industry Fleet forecast MRO forecast Transformation of MRO industry

Agenda MRO business and regulations State of the industry Fleet forecast MRO forecast Transformation of MRO industry

Maintenance Repair Overhaul What does MRO mean? Aircraft maintenance, repair and overhaul (MRO) is an essential requirement to ensure that aircraft are maintained in pre-determined conditions of airworthiness to safely transport passengers and cargo.

MRO Regulating Framework Initial airworthiness Continuation airworthiness Design organisation – Part 21J Production organisation – Part 21G Continuation airworthiness (CAM) – Part M Maintenance – Part 145 or Part M subpart F Staff – Part 66 Training – Part 147

Magnetic MRO as an example

Agenda MRO business and regulations State of the industry Fleet forecast MRO forecast Transformation of MRO industry

Market share by Region 2016 MRO Market Share by Region

Industry Outlook

Jet Fuel Price

Industry financial performance

Agenda MRO business and regulations State of the industry Fleet forecast MRO forecast Transformation of MRO industry

Global fleet characteristics

Narrow-body deliveries

Number of Aircraft Global aircraft demand Wide-body deliveries Regional jet deliveries Turboprop deliveries

Average age by usage

Fleet growth by region

Agenda MRO business and regulations State of the industry Fleet forecast MRO forecast Transformation of MRO industry

Global MRO Spend

MRO Spend by Region

Agenda MRO business and regulations State of the industry Fleet forecast MRO forecast Transformation of MRO industry

Additional standard materials, consumables, structural items: Historical labor intensive MRO Additional standard materials, consumables, structural items: EUR 100 thousand Total charged: EUR 600 thousand Initial fixed fee: EUR 500 thousand

Additional standard materials, consumables, structural items: Historical labor intensive MRO Additional standard materials, consumables, structural items: EUR 100 thousand Low cost labot driven MRO, focus on production efficiencies. Generally suffering seasonality and heavy competition. Few join the luxury of base-loading airline, which is a benefit and risk at the same time. Total charged: EUR 600 thousand Initial fixed fee: EUR 500 thousand

Additional services/ products sold: MRO transformation into total technical care Additional standard materials, consumables, structural items: EUR 551 thousand Additional workshop services sold (interior, wheels, brakes, batteries): EUR 28 thousand Engine sales: EUR 830 thousand Additional services/ products sold: EUR 1.9 million Total charged: EUR 2.4 million Initial fixed fee: EUR 500 thousand Additional labour sold due to findings: EUR 231 thousand Additional components: EUR 265 thousand Aircraft painting services: EUR 49 thousand

MRO transformation into total technical care Additional standard materials, consumables, structural items: EUR 551 thousand Additional workshop services sold (interior, wheels, brakes, batteries): EUR 28 thousand Engine sales: EUR 830 thousand Additional services/ products sold: EUR 1.9 million Total technical care organization with extensive in-house capabilities. Benefit from inter-organization cross-selling. Preferred choice for airlines and asset owners. Less vulnerable for seasonality and revenue fluctuation. Total charged: EUR 2.4 million Initial fixed fee: EUR 500 thousand Additional labour sold due to findings: EUR 231 thousand Additional components: EUR 265 thousand Aircraft painting services: EUR 49 thousand

MRO as asset management ‘vehicle’ A case study: Airbus 320 with V2500-A5 engines – an asset trade with lease attached 1 Business & Project Review - Project commenced in Nov 2016 - Documentation review by MMRO’s engineers to determine the residual value and operational potential of the asset - Detailed business plan prepared and new aircraft operator allocated 4 Purchase & Sale - During transition, AC was purchased Total deal value: EUR 9m Time in hangar: 18 days 2 Preparation - Preparation of AC transition plan 3 Works Performed - Cabin modifications and layout change (Interior Department, Design and Production) Mandatory maintenance works (BM) Aircraft painting (Painting) New escape slides and batteries (Workshop) Fuselage inspection (Engineering) Arrival: 21st of April 2017 Departure: 9th of May 2017

MRO as asset management ‘vehicle’ A case study: Airbus 320 with V2500-A5 engines – an asset trade with lease attached 1 Business & Project Review - Project commenced in Nov 2016 - Documentation review by MMRO’s engineers to determine the residual value and operational potential of the asset - Detailed business plan prepared and new aircraft operator allocated 4 Purchase & Sale - During transition, AC was purchased Total deal value: EUR 9m Extensive historical know-how from labor intensive MRO, in addition total technical care capability enabling execution of complicated transition projects and this formula being supported by access to capital, gives a powerful asset management/trading tool. Time in hangar: 18 days 2 Preparation - Preparation of AC transition plan 3 Works Performed - Cabin modifications and layout change (Interior Department, Design and Production) Mandatory maintenance works (BM) Aircraft painting (Painting) New escape slides and batteries (Workshop) Fuselage inspection (Engineering) Arrival: 21st of April 2017 Departure: 9th of May 2017

Innovation

Thank You Risto Mäeots, CEO risto.maeots@magneticmro.com