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Trends Point to a Strong Year for M&A in the MRO Sector in 2026

Trends Point to a Strong Year for M&A in the MRO Sector in 2026
Ryan Kirby, junior partner at Alderman & Company, provides a comprehensive end-of-year analysis of the mid-market aviation sector, emphasizing several enduring factors that suggest a robust outlook for mergers and acquisitions (M&A) within the Maintenance, Repair, and Overhaul (MRO) industry as 2026 approaches.
Stable Demand Amid Constrained Supply
Global commercial air travel demand has demonstrated remarkable resilience despite aircraft production remaining below pre-pandemic levels. Data from Airports Council International projects global passenger traffic to reach 9.8 billion in 2025, marking a 3.7% increase year-on-year. International travel is expected to grow by 5.3%, surpassing domestic travel growth, which is forecasted at 2.4%. In the United States, Transportation Security Administration (TSA) figures reveal that 828 million passengers were screened from January to November 2025, representing a 6.9% increase compared to the same period in 2019. However, the modest 0.3% rise from 2024 suggests a stabilization in travel demand.
This balance in demand is influenced by a combination of economic factors, pricing strategies, capacity limitations, and shifting travel behaviors. Conversely, the supply side presents a more constrained picture. The International Air Transport Association (IATA) reports that commercial jet production remains significantly below historical averages, with order backlogs exceeding 17,000 aircraft—equivalent to nearly 60% of the active global fleet, compared to 30-40% prior to 2019. Engine availability continues to be a critical bottleneck, compounded by broader production challenges. IATA forecasts that the disparity between production capacity and airline requirements may not resolve until between 2031 and 2034.
Aftermarket Strength and M&A Momentum
These supply constraints have contributed to an aging global airline fleet, which now averages 15.1 years, up from 11.1 years in 2019. This trend has sustained strong demand for commercial aircraft aftermarket services. Contrary to early pandemic predictions of a slowdown, ongoing production delays and heightened safety concerns have maintained elevated demand for MRO offerings.
Valuations within the sector reflect this sustained momentum. As of late 2025, trailing twelve-month price-to-earnings (P/E) ratios for leading MRO companies remain notably high: AAR Corp at 103, Heico Corp at 68, StandardAero at 49, and TransDigm Group at 40. These robust valuations, coupled with persistent aftermarket demand, are attracting significant buyer interest and are expected to drive active M&A activity throughout 2026.
Challenges and Competitive Dynamics
Despite the optimistic outlook, several challenges could moderate enthusiasm for M&A transactions. Regulatory scrutiny, particularly concerning antitrust issues, is anticipated to intensify as consolidation accelerates within the sector. Inflationary pressures and rising costs of living may also influence deal structures and valuations. Furthermore, potential supply-side disruptions stemming from a weakening labor market could prompt increased caution among investors.
In response to these challenges, industry competitors are likely to pursue aggressive consolidation strategies, including platform roll-ups, to achieve greater scale and foster innovation. Such initiatives aim to strengthen market positions and leverage the sector’s strong fundamentals, even as companies navigate regulatory hurdles and economic uncertainties.
Outlook
With sustained demand, an aging fleet, and constrained new aircraft supply, the MRO sector is positioned for a dynamic year of mergers and acquisitions in 2026. Industry participants will need to carefully balance growth objectives with regulatory compliance and evolving market risks to fully capitalize on the sector’s potential.

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