There is greater demand for spare engines than the market is able to supply but repair capacity and other supply chain issues will be the biggest challenges facing the sector.
In the latest edition of AviTrader MRO, editor Keith Mwanalushi, speaks to VP Commercial Trading, Oliver James at AerFin about how AerFin continues to see a strong leasing demand for narrowbody engine types in the long term as post-pandemic recovery continues to favour shorter domestic and regional travel.
Speaking to Keith, Oliver said: “In the short term we have seen a ramp up in narrowbody aircraft utilisations to near pre-covid levels, this key recovery driver has led to a surge in engine maintenance activity, however global supply chain issues and labour shortages are continuing to cause capacity challenges for many of the major MRO’s which is driving demand for short term leasing”. Specifically mentions the CFM56-7B, CFM56-5B and V2500 high thrust variants.
Repair Capacity Challenges
The MRO sector has been hit by stringent capacity constraints as a consequence of global supply chain issues and AerFin observes vendor TATs averaging between 60-90 days on Life Limited Parts (LLP’s) and 50 to 60 days on non-LLP’s and this has created a delay in how quickly engine shop visits can be completed due to the lack of good quality USM being available at the right times. Therefore, as James mentions, the demand for spare engines will naturally increase. “The pandemic has put serious pressure on an already struggling repair vendor network with no signs of this easing in the short to medium term,” he states.
Spares for both planned and unplanned removal
There are several considerations which need to be carefully reviewed to help airlines guarantee availability of spare engines for both planned, and unplanned removals, which should be tailored to the specific needs of each airline, suggests James from AerFin. “A streamlined engine removal plan and long-term forecasting for fleet phase in and phase outs can help to ensure effective efficient engine management.” James says ensuring the right balance of owned and leased engines is also critical in managing healthy cashflows.
“Sale and lease backs, can, in some cases be effective ways for airlines to boost liquidity and better manage the balance between capital expenditure versus operational expenses. “Understanding fleet reliability and accounting for MRO turnaround times for engines which are undergoing repair and overhaul can highly affect the number of spares required.
For maturing fleets, James recommends selecting the right aftermarket service provider for effective fleet phase outs and engine management that can help alleviate some of these challenges.