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1 Maintenance Prognostics Digital solutions to optimize maintenance operations Juan D. Lopez Program Manager, Fleet and Maintenance Solutions September The statements contained herein are based on good faith assumptions are to be used for general information purposes only. These statements do not constitute an offer, promise, warranty or guarantee of performance. BOEING 1

2 2015 BOEING 2

3 General trends in aviation Today s business realities Historic profitability Lifecycle approach Opportunities Reduce schedule interruptions Increase maintenance efficiencies Digital asset management Summary BOEING 3

4 General trends Traffic growth but prices declining Operating costs high and volatile Profitability slowly improving Technology becoming a key enabler BOEING 4

5 Historic profitability Historic financial environment Aviation Industry ROIC vs WACC (%) WACC ROIC Weighted Average Cost of Capital Return on Invested Capital Source: McKinsey & Company for IATA BOEING 5

6 General trends Commercial Aviation Industry Costs Aircraft (~10%) M&E (~10%) G&A (~16%) Stations (~16%) Crew (~16%) Fuel (~32%) Increasing operating complexity Relentless cost pressures Legacy information systems Enabling information-rich airplanes Disruptive and enabling technologies Need for real-time information $700B (2014 Expenses Estimate) Airlines Seeking New Levels of Operational Efficiency BOEING 6

7 Maintenance Optimization Asset management En Route Health management Airplane Introduction Tech logs Dispatch Arrival Airplane Transition Airplane and engine technical docs Maintenance Records management BOEING 7

8 Opportunities throughout the lifecycle Reduce schedule interruptions Increase maintenance efficiencies Digital asset management BOEING 8

9 Opportunities throughout the lifecycle Reduce schedule interruptions Increase maintenance efficiencies Digital asset management BOEING 9

10 Some level setting Technical performance measures Schedule Reliability is expressed as a percentage of scheduled revenue flights that are not delayed or interrupted Airplane Operational Availability = 1 Downtimes Total Time Available *Includes scheduled and unscheduled downtimes BOEING 10

11 Cost Cost Maintenance strategies Cost is an important part of the schedule reliability equation HIGH Maintenance cost vs # failures HIGH Maintenance cost vs Schedule Reliability Preventive Predictive Reactive Reactive Preventive Total cost Prevention cost Repair cost Predictive LOW # of Failures HIGH LOW Schedule Reliability HIGH BOEING 11

12 Opportunity: Airplane Health Management Proactive use of airplane data Faults are not identified until the aircraft is on the ground. Unscheduled maintenance can cause costly delays and cancellations Without real time visibility With AHM Real time visibility With AHM, faults are known in flight and maintenance action planned before arrival. AHM helps airlines to maintain their fleets in the air, on schedule and reduce schedule delays BOEING 12

13 Health management goes beyond real-time visibility Prognostic alerts for airplane systems Abnormal Trend days Alert Generated Failure Predicting faults and minimizing operational disruption BOEING 13

14 Data Prognostics health management value drivers Hardware constraints Airplane Systems Data Availability Multiple systems generate performance data (pressure, temperature, etc). Depending on the airplane hardware configuration, systems will transmit data to a local data bus. Data Collection & On Board Processing Data Transmission Prognostic Algorithms Central data (CMC, DFDAU) funnels and collects real time performance data. Data is transmitted to ground stations via ACARS or Satellite. Ground station receives and processes data. Thresholds are evaluated and Prognostic alerts are developed. CMC: Central Maintenance Computer DFDAU: Digital Flight Data Acquisition Unit Data availability and transmission are key to unleash prognostics value BOEING 14

15 Example Pneumatics System ATA 36 Techlog reports Before Airplane Health Management Post Airplane Health Management implementation ~80% reduction in rate of delay

16 Maintenance optimization Opportunity throughout the lifecycle Reduce schedule interruptions Increase maintenance efficiencies Digital asset management

17 How are we doing maintenance today?

18 Mechanic is by the airplane Mechanic is by the airplane Logs onto multiple systems Goes to maintenance building Prints job cards

19 And then goes through non-value added steps Goes back to airplane Properly documents the fix in a paper record Double checks for the latest revision of manuals Fixes the airplane

20 Couldn t we do this better?

21 Can mobile devices help? M&E mobile applications Gets the information he needs Fixes the airplane Mechanic is by the airplane Up to date and compliant in all devices

22 Opportunity: Toolbox Mobile suite Maintenance Turn Time A productivity solution to empower mechanics by the airplane, organize and streamline maintenance information, and improve visibility and collaboration Extending and optimizing Maintenance Performance Toolbox Library for mobile use Toolbox Mobile Library Providing part inventory queries remotely via mobile devices Toolbox Mobile Parts

23 What about tackling a large paper challenge? Records management Instead of paper records And paperless Go digital

24 Opportunity: Toolbox Records module A digital aircraft records system that benefits operators, lessors and MROs Increases efficiency of maintenance records management Saves time and labor costs during daily operations Significant savings during aircraft transition events Avoidance of costly fines and penalties due to incomplete records and paperwork errors Direct maintenance and engineering labor costs savings Faster and more efficient processing of maintenance records Access to all technical documents at the point of need Eases the pain during airplane transitions Complete set of back to birth delivery documents Consolidated file for AD notes, repairs and overhaul Data regarding component repair and overhaul

25 Maintenance optimization Value proposition Opportunity throughout the lifecycle Reduce schedule interruptions Increase maintenance efficiencies Digital asset management

26 Loadable Software Airplane Parts (LSAP) LSAPs are airplane operational software Designed for electronic loading without altering the hardware Managed as a part > 300 LSAPs ~ 100 LSAPs Installation is independent of the hardware part number Controlled as part of the airplane and configuration ~ 30 LSAPs

27 Characteristics of today s software management environment More sophisticated avionics, requiring more operational software (LSAPs) Airplane operational software distributed only via secure internet A comprehensive ground system has to be established to receive the LSAPs A comprehensive suite of A maintenance laptop with the designated security software can be used to load the LSAPs onto the airplane configuration, management, and utility software has to be installed into a ground system

28 Imagine distributing software with traditional methods

29 Opportunity: LSAP Services Software Distribution Manager The e-enabling ground infrastructure The ground systems and infrastructure required for setting up e- enabling software suite and airline implementation Library Manager Management of LSAPs Managing of receiving, inspection, certificates, staging and other aspects of LSAP Library and management processes Software Distribution Tools The e-enabling software suite The suite of software required for secure receiving, managing, and loading of LSAPs from the OEM to the airplane

30 Airplane Introduction Hosted Solutions Loadable Software Data Hosting Services Dispatch En Route Arrival AHM Fault Forwarding Predictive Alerting & Prioritization ELB Pilot/Cabin Reports Maintenance Release Toolbox Tech documents Task Cards Authoring Structural Records Digital Records Mobile Mechanic Tools Digital Records Maintenance Airplane Transition BOEING 30

31 Summary Technology solution decisions come down to a financial business case Cost Benefit PRESENT Hardware retrofits to enable data availability (sensors, etc). Hardware mobile device costs Infrastructure costs Incremental Cost Of Solutions Incremental Benefit Of Solutions FUTURE Reduced Unscheduled interruptions Maintenance Efficiencies Digital Asset management FUTURE Data Transmission Costs. Incremental Labor to monitor health monitoring systems Cost/Benefit Analysis Each operator defines the right balance in the cost/benefit scale

32 Thank You

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