Framing the Aftermarket Debate - Headed for 2H Slowdown; Gauging Potential for 2027 Snapback

Research evidence excerpt

Framing the Aftermarket Debate - Headed for 2H Slowdown; Gauging Potential for 2027 Snapback

Equity Research

Industry Update — May 12, 2026

Aerospace & Defense

Framing the Aftermarket Debate - Headed

for 2H Slowdown; Gauging Potential for 2027

Snapback

Examine Aftermarket in Context of Out-of-Warranty

Growth, Potential for Increased Retirements & GTF Returns

Our Call David Strauss

Airline capacity cuts likely to weigh on 2H aftermarket while 2027 recovery could be Equity Analyst | Wells Fargo Securities, LLC

David.Strauss@wellsfargo.com | 212-214-8052

impacted by low out-of-warranty fleet growth and GTF returns. We evaluate range of

Joshua Kornpotential 2027 aftermarket outcomes.

Associate Equity Analyst | Wells Fargo Securities, LLC

Joshua.T.Korn@wellsfargo.com | 212-214-6421

Global fight hour growth looks likely to run only LSD through most of the year and Ben Tomick

with this we expect MSD 2H aftermarket growth. Barring a global recession, we expect Associate Equity Analyst | Wells Fargo Securities, LLC

flight activity to bounce back some in 2027. However, the potential for a corresponding Ben.Tomick@wellsfargo.com | 332-295-4224

aftermarket snapback could be curtailed by slow out-of-warranty fleet growth, made

potentially worse by increased retirements, along with higher in-warranty utilization

driven by GTF returns.

Out-of-warranty flight hours are the primary driver of aftermarket growth. Slow new

aircraft deliveries along with lower-than-normal utilization of newer aircraft on durability

issues has seen airlines allocate a very high proportion of flight hours to older aircraft,

driving 20% aftermarket growth on average over last several years.

We estimate that the out-of-warranty fleet is barely growing in 2026-27 even before