As older engines are operated for longer, airlines are pushing hard for alternative maintenance strategies to avoid the costs of full performance restoration.
Other asset owners are affected, too. Brian Power, executive vice president of fleet operations at Nordic Aviation Capital, noted at Aviation Week Network’s Engine Leasing, Trading and Finance (ELTF) Europe earlier this year that the cost of putting engines through shops has started to influence trading decisions about how long to hold assets, “whereas it never would have before”.
High overhaul costs have resulted in much higher demand for alternatives, including lighter work scopes and shorter builds, green time leasing and module exchanges.
However, ELTF Europe panelists pointed out disadvantages to each of these strategies. For instance, after AerFin’s vice president of trading, John White, noted that performance restorations had fallen to 7,000 cycles from 10,000 or so, SMBC Aero Engine Lease Managing Director Roger Welaratne argued that short-build engines “don’t make much sense economically.” He added: “Either you do a full visit or sell it for parts.”
White also pointed out the importance of restoring cycles consistently across the engine “or else you’re just building in an extra maintenance event.”
And while module swaps remain a valid alternative to full performance restoration to achieve time and cost savings, some of those advantages are being eroded, said David Rushe, senior vice president of engine group and originations at Magellan Aviation. “Even module swaps can be three to four months now for a [low-pressure turbine] swap, which means you’re losing some of those marginal gains,” he said.
Green time leasing is also challenging, with much of the spare cycles accumulated during the pandemic now used up and lessors pushing up green time terms from 3-4 months to 12.
Highlighting how Brazilian carrier Gol, which recently exited Chapter 11 bankruptcy protection, had been caught out by its plans to rely on a green time market that no longer existed, panelists emphasized that airlines need to better plan their end-of-lease strategies.
Stay tuned to the September issue of Inside MRO for more on engine aftermarket trends and perspectives from lessors.
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