Business Insider Discussion: Business valuations soaring past aircraft structures and powerplants due to fleet modernization
In the ever-evolving world of air travel, airlines are investing heavily in enhancing the passenger experience, improving operational efficiency, and extending the lifespan of their existing planes. This trend towards aircraft interior upgrades and component modernisation presents a compelling growth opportunity for middle-market aerospace suppliers and MRO providers.
The average age of the flying commercial aircraft fleet has reached an all-time high of 14.4 years, and this is not going unnoticed. Airlines, recognising the need to stay competitive, are retrofitting their existing fleets with advanced technologies, including Starlink, to keep up with the demand for modern connectivity.
Virgin Atlantic is leading the charge in the UK, aiming to be the first airline to introduce Starlink connectivity across its entire fleet by 2027. Similarly, United Airlines started a Starlink roll-out in its regional fleet in March, providing free access for all MileagePlus customers.
Emirates, known for its reputation for luxury and comfort, prioritised cabin upgrades as part of its refurbishment program. The airline initially invested $4 billion, but recently increased this to $5 billion to refurbish its aircraft. This program allowed Emirates to introduce a new product, premium economy, which was a significant contributor to the airline's record-high profits by the end of the 2024 fiscal year. The refurbishment program was extended to include an additional 170 aircraft due to delivery delays.
Global demand for air travel has been increasing significantly for the past few years, with record highs being hit in 2024. Suppliers of high-quality interior components and cabin technologies, as well as MRO providers, are seeing increased demand due to these major investments.
American Airlines is introducing Flagship Suite seats with privacy doors on retrofitted Boeing 777-300ERs, while also upgrading Airbus 319s with larger bins and power outlets, starting in spring 2025. Air France is modernising its cabins, with new Business Class configurations on Airbus A350s, emphasising comfort and privacy with updated seating and mood lighting. Southwest Airlines is investing in a redesigned cabin with RECARO seats, featuring adjustable headrests, device holders, and larger overhead bins, with retrofits for existing 737-800s and 737-700s starting mid-year.
Delta Air Lines is debuting a new cabin design with updated seating materials, enhanced lighting, and a modern color palette on a Boeing 757 in late 2024 and an Airbus A350 in early 2025. Modern connectivity has become a cornerstone for airline innovation, and these updates reflect this focus.
While the financial backers who have invested in extensive interior fittings and component modernizations for airlines have not been explicitly named, companies like Frequentis are significantly involved in digital modernization projects related to air traffic management infrastructure, which supports modernization efforts in the aviation sector. This relationship not only supports aftermarket revenue growth but also enhances the intrinsic value of these companies to both financial and strategic buyers.
As the aviation industry continues to evolve, it's clear that passenger comfort, technological advancements, and operational efficiency will remain key priorities for airlines worldwide.
