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IBA predicts long-term turbulence in narrow-body engine market

Pratt & Whitney GTF engine
© Pratt & Whitney GTF engine

In its latest webinar on the narrow-body engine market, IBA, a leading aviation market intelligence and consultancy company, has predicted that engine market values and lease rates are likely to increase given the current and ongoing supply chain issues and the more specific GTF engine problems. It expects the industry to suffer longer term due to growing pressure on shop visits and turnaround times, which are forecasted to increase. 

Led by IBA’s President Phil Seymour, Engine and Parts Manager Jamie Davey and Sarah Farrugia-Warren Senior Technical Manager – Powerplant, IBA’s expert team stressed that MRO shop visits are already under pressure from the post-COVID resource gap and the unscheduled GTF engine inspections. Previous-generation engines are still undergoing shop visits following deferred maintenance because of the global pandemic, resulting in high parts demand.

In the shorter term, turnaround times are likely to be strained further as Pratt & Whitney GTF engine issues increase pressure. The number of engines due to be inspected will cause a short-term spike in shop visit demand and the impact will be far-reaching, especially if the mandated inspections of the high-pressure turbine (HPT) create additional work once engines are opened up. Analysis from IBA Insight, which identifies aircraft and their fitted engines that are currently stored and parked for more than 60 days, suggests some of the operators most affected by the GTF issues include Go First with 88 engines, IndiGo which is not far behind with 80 engines, and Air China at 36. The list is exhaustive, and further affected airlines include large A320 operators such as Wizz Air.

“We have to remember that the engine OEMs are at the leading edge of design and material technology. The incredible advances in fuel burn saving over the decades has led, and will likely continue to lead, to some form of Airworthiness Directives action. It’s the price we pay for driving towards more efficient aircraft and engine combinations, with the overriding need for safe operations. We will have to see if the fuel burn benefits also create a long-term improvement in on-wing times and overall lower cost per hour/cycle”, added Phil Seymour, IBA’s President.

IBA predicts that, in 2024, there will be around 2,500 shop visits (excluding the GTF additional shop visits) followed by a significant jump to 3,500 visits in 2025. Comparatively, there have so far been 2,250 visits in 2023. This situation should come to a slight plateau between 2025 and 2027 at around 3,800 visits annually before peaking to over 4,000 visits in 2028. This will then start to decrease, ending the decade at just below 4,000 visits in 2030.

Alongside these GTF issues, IBA forecasts that there will be new engine production delays and USM supply chain demand will continue to affect values and lease rates. According to IBA, cost escalations continue to increase and CFM56 engines are now seeing market values in some cases increase above base value. Data from IBA Insight reveals that the market value for the CFM56/5B4/3 PIP was US$6.37m in the first half of 2023 and has risen to US$6.78m in the second half.

The market value for the PW1127G was US$11.27m in the first half of 2023 and has jumped to US$13.52m in the second half of this year. With this increase in cost coupled with high demand in the narrow-body market, IBA expects the market to become more volatile.

Turning to lease rates, IBA also expects increases in 2024 due to the supply / demand balance, expecting some engine lease rates to surpass 2019 rates in 2024. This includes the CFM56-5B which was US$62,000 pm in 2019 and is predicted to be US$78,000 pm in 2024 according to data from IBA Insight. Similarly, the V2500-A5 lease rate was $56,000 pm in 2019 and is expected to rise to $72,000 pm by 2024. (£1.00 = US$1.26 at time of publication).

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