Widebody Comeback Drives New Engine Life-Cycle Strategies

Life-cycle cost management of widebody engines may have slipped down the list of priorities for many operators in recent years. Long-haul travel was the airline traffic segment hardest hit by the COVID-19 pandemic and has proven the slowest to recover amid different levels of travel restrictions around the world and the uncertain future for business travel.

However, with China lifting entry restrictions and popular tourist destinations reopening, capacity is coming back into the long-haul market, bringing a renewed focus on widebody engine costs as delayed maintenance work comes due and powerplants are returned from storage.

With this recovery, lessor Avolon sees a renewal in midlife widebodies—the segment in which values plummeted most dramatically early in the pandemic—as international markets reopen and new-build aircraft delivery delays persist. It predicts current-generation Airbus A330 lease rates will rise 35% this year. For the airlines operating them, this will require deliberation over workscopes and other maintenance planning for workhorse engines such as the Rolls-Royce Trent 700, General Electric CF6-80 and Pratt & Whitney PW4000—some of which were earmarked for retirement two years ago.

Meanwhile, operators of new-generation powerplants such as the Rolls Trent XWB and 7000 and GE’s GEnx must plan for the life cycle of engines that have no successors in development, meaning reconsideration of the operational and replacement cycles of large engines.

Woven into these long-term strategies must be smart maintenance planning and parts provisioning, as engine support costs form the biggest element of any airline’s maintenance expenses.

“Generally, the objective is to continuously keep the engine total life-cycle cost front and center and make choices that optimize both cost of ownership and airline value creation, rather than looking only at short-term maintenance costs,” says Michael Grootenboer, senior vice president of engine products for AFI KLM E&M.

Unique Requirements

Cost planning for widebody engines requires operators to consider factors that may not always apply to smaller engines. The most obvious is the prevalence of full-service maintenance contracts, which are signed with engine manufacturers on most new large engine sales.

Charged on a dollar-per-flight-hour basis, these contracts vary in scope but aim to provide the same end result: predictable maintenance costs.

“Mainly, such contracts do cover the risk while providing predictable costs quite well,” says Bernhard Scholz, Lufthansa Group’s director of group engine management.

However, he adds that operators may face difficult decisions once the initial term of a full-service contract ends. “Depending on the MRO market diversity—which is zero for certain engine types—and on the engine maturity, getting a comprehensive MRO contract is challenging,” Scholz says.

Even during the initial term, full-service contracts do not mean operators can leave responsibility for all cost planning at the door of the OEM or MRO provider. Operating patterns must be designed with maintenance in mind, and the use of expensive life-limited parts (LLP) must be monitored.

“No engine maintenance contract covers all risks and eventualities, and incremental coverage generally comes at a premium,” Grootenboer says. “Even in the case of a comprehensive power-by-the-hour [flight-hour-based] type of agreement, time on wing continues to impact both the operational impact of engine removals and the timing of cash flows triggered by maintenance events in cases of restored rates. Use of cycles [the number of cycles used] on life-limited parts is generally also not covered in a power-by-the-hour contract.”

Widebody engine operators also must approach engine management differently than narrowbody operators, since their different operational profiles mean engine removals are more performance-driven than for narrowbody engines, which hinge more on life-limited part (LLP) limits.

“Generally, performance-driven removals are less predictable and therefore need a high expertise in the engine on-wing behavior as well as just-in-time logistics for spare engines,” Scholz notes.

One reason for this is the greater range of widebody aircraft and their engines, which makes for more complex logistics to ensure spare parts are accessible across different continents and at distant airports. This must include better predictive maintenance to minimize component failures when the engine is outside an airline’s core maintenance support network.

Grootenboer agrees that widebody engine removals depend more on performance than on LLP limits. “Therefore, engine predictive maintenance has a greater impact on widebody life-cycle cost management than for narrowbody engines,” he says.

Accordingly, it makes sense to use life-cycle management tools that interact with predictive maintenance technology to ensure optimized operating and replacement cycles. Grootenboer says AFI KLM E&M’s Prognos predictive maintenance system is the airline’s first line of defense against “unpredicted maintenance over-costs and airline operational burdens.”

However, it is easier to apply a data-driven approach to maintenance planning for older-generation engines than for newer ones, which do not have a long service history. This makes life-cycle management more difficult, as not enough hours have been accumulated on an engine type to predict points of failure in the future.

Nonetheless, experience with older engine types can inform life-cycle management for newer ones, Grootenboer says. “While new engine platforms may have limited maintenance data available, their technology generally builds on that of previous engine models,” he says. Grootenboer gives the example of the CFM Leap narrowbody engine inheriting technologies from the GEnx widebody powerplant. “With Air France KLM’s extensive technical and operational experience in the maintenance and operation of a wide range of engine types, it is possible to extrapolate likely operational and maintenance behavior for new engines,” he says.

It also is vital to maintain a close relationship and ongoing dialog with engine OEMs to understand issues occurring elsewhere in the global engine fleet and keep abreast of their latest forecasts for wear and other potential issues.

Scholz notes that “design maturity is a key factor,” as is “how well an engine OEM is coming up with improved solutions or in-service support to cover operational and financial disadvantages.”

He also sees that airlines are increasingly opting for maintenance-cost guarantees with OEMs when ordering new engines.

Maintenance And Parts

“If an engine requires off-wing maintenance, the next step is smart work-scope planning to ensure the optimal maintenance event of that individual engine is performed effectively and efficiently,” Grootenboer says.

The next step is provisioning the right material—a key consideration, given the ever-increasing price of parts. “On certain engines, we see that material costs since 2013 have almost doubled,” Scholz observes.

Raw material and energy-price inflation have fed into steep price increases for new engine parts, which means airlines and MRO providers should pursue alternatives to keep life-cycle costs down.

“To minimize the impact of new part purchases on the engine cost of ownership, AFI KLM E&M has a wide range of engine parts repair capabilities, to which we add continuously,” Grootenboer says. “Next, if parts are deemed unrepairable, we replace them where possible with used serviceable material.”

After a few quiet years for the used material market, due to the sharp decline in maintenance activity, supply is set to increase as more aircraft and engines are retired.

Avolon points out that retirements have remained “artificially low,” at about 300 annually since the beginning of the pandemic, versus 600 before it started. The lessor attributes this to booming cargo demand, a depressed used serviceable material market and an ongoing labor squeeze.

Avolon sees retirements accelerating this year as airlines and MRO providers race to restock parts inventories—pushing up demand for teardowns—and the fleet of old, stored aircraft is given its marching orders. The lessor estimates that 1,200 more aircraft older than 20 years are in storage now than before the pandemic.