Strained Supply Benefits Engine Lessor

FTAI Aviation, a U.S.-based provider of aircraft and engine leasing services, has seen its core revenues jump as air travel demand rises and airlines extend their use of current-generation narrowbody engines: the CFM56 and V2500.

The company's aerospace products segment, which focuses on used serviceable material (USM) and module changes for the CFM56, expanded rapidly, with sales rising to $53 million from $8 million in the prior-year period.

The company noted that engine OEMs increased the price of new parts by a double-digit percentage in the third quarter, thus adding to demand for cost-effective parts and maintenance solutions.

“Furthermore, the replacement value of our engines increases as full shop visit costs are predominately engine parts,” FTAI stated.

It also noted that strained supply chains and labor shortages had increased the turnaround time of an engine shop visit. 

“This has created further demand for available assets and quick-turn maintenance solutions including modules, serviceable engines and ready-to-ship parts,” said FTAI.

These trends had already been flagged to Aviation Week's Engine Yearbook during a September interview with FTAI Aviation Chief Operating Officer David Moreno, who said: “Airlines and lessors will focus on mitigating the additional cost burden through the use of aftermarket maintenance solutions."

“These solutions include a greater reliance on hospital visits and green-time leasing to delay costly maintenance, as well as modules and used serviceable material to lower the cost of engines in shop," said Moreno. "We expect this trend to continue for the next several years as strained supply chains in the overhaul market intensify this issue.” 

Leasing revenue, meanwhile, roughly doubled to $165 million, although this included $86 million from the sales of 19 engines and nine aircraft. Core lease income was stable year on year. 

FTAI also acquired eight engines and one aircraft during the quarter to Sept. 30, finishing the period with 229 engines and 96 aircraft.