AviTrader recently caught-up with AerFin's Director - Sales & Marketing, James Bennett and AerFin's - Leasing & Trading Manager, Oliver James to discuss their views on how the ongoing COVID-19 pandemic will most likely impact the Engine MRO as well as Engine Leasing and Trading space.
The grounding of the world’s fleet due to the coronavirus has caused a plummet in passenger aircraft utilisation, it comes as no surprise to Oliver James, AerFin Trading and Leasing Manager that despite the short term increase in air cargo, airlines across the board will delay all but necessary Engine maintenance in their efforts to maintain liquidity and conserve cash.
“The reduction in air travel has had a direct impact across all aspects of the industry; we have seen many operators defer new engine deliveries till 2021 and expect to see an accelerated retirement of older generation equipment. As a result, we can expect to see a short-term increase in lease engine activity as airlines continue to preserve cash and avoid costly maintenance events,” says James.
James Bennett, AerFin Director Sales and Marketing adds that in addition to looking to the market for engine lease opportunities, airlines will also be using green-time engines from retired aircraft to support their existing operations as they look to maximise assets efficiency during this challenging period.
Speaking on the engine disassembly market James at AerFin says Covid-19 has exacerbated the pre-existing MRO backlogs – “Many shops have put work on hold either voluntarily or due to government orders and those that are still in business have had to implement both temporary and or permanent workforce cuts."
“With an increase in retirements of older generation equipment we can expect to see increase in engine disassembly activity.” Bennett continues saying airlines will likely seek the support of innovative and bespoke cost saving solutions from aftermarket partners when it comes to managing fleet operations and expensive shop visit maintenance events.
AerFin has already worked with a number of operators in the development of such solutions, by not just supporting with the engine disassembly activity at its 150,000 sq. ft facility, but adding value to their supply chain in managing the component repair process, the logistics cycle and storage solutions.
These “Reduce to Produce” (RTP) engine programmes have proved successful for AerFin’s partners looking to maximise residual value of their assets, whilst supporting their maintenance materials demands. “We expect demand for such engine disassembly solutions to increase as operators continue to navigate the short to medium-term challenges. Bennett states. AerFin has had engine disassembly capability at their facility for the past eight years – this capability has been largely to support the disassembly of their own acquired assets, supplying the engine material into its global supply chain of airlines and MROs.
Link to full article available here