How LOT Polish Airlines Is Managing Engine Shop Visits

Maciej Maciejewicz, powerplant manager at LOT Polish Airlines, discusses how the airline is managing engine shop visits and what it looks for when contracting MRO partners.

How is LOT’s operation ramping up in 2022 compared with the previous two years?

From the airline’s perspective, we are fitting in well within the International Air Transport Association’s predictions and how commercial aviation in Europe and globally will fare after COVID-19. Our utilization rates were at around 60% of 2019 levels last year and around 80% for some months this year. The operations from some perspectives even have exceeded 2019 levels, but with poor quality in terms of regularity. This is most likely due to airports and not all the airlines being ready for service. LOT aircraft have been flying regularly this year, and it is important that we’ve seen this trend as we’d been concerned previously about what might happen in the fall season. During the pandemic we added some destinations we didn’t normally fly to, but we performed those flights on less frequent schedules, and this strategy worked fine for us. The Russian invasion of Ukraine has hit us, as around 10% of the airline’s business came from Russia and Ukraine. At the start of the invasion, our air traffic control was overloaded [with] traffic [that] was diverted through Poland. This has improved slightly since then; but certainly, the airline is very busy this year.

How are you managing engine shop visits this year? Has there been an increase in shop visits?

From my perspective [on] managing engine shop visits: the intensity of the airline operation is causing us problems. We’ve held off shop visits on one portion of our aircraft fleet—the original Embraer 190 and 195 powered by [GE] CF34-10E engines—for some time. One of the reasons was because we didn’t have a contract with a maintenance provider at that time, and it has taken us a while to contract one because we didn’t understand all the factors we needed to take into consideration as an operator that operates on mostly a leased fleet. Our regional fleet is about 80% of our operational needs. These assets don’t come from just one lessor, and of course every leasing company had a different approach to the past 2.5 years. We spent a lot of time during COVID readjusting our lease contracts and that had an impact on the delivery condition of engines. As an outcome, many lessors came back to us requesting we don’t perform shop visits on their asset—as there was little desire to spend money on life-limited parts. We’ve been readjusting our shop visit planning as far back as early last year. Specifically, for the CF34-10E engine fleet, the number of shop visits will be far fewer than initially planned, and we are working with a completely different MRO partner, in part due to the lessor constraints. Pre-COVID, we thought it’d be around 40 shop visits for those engines. But when the pandemic started, this was reduced to about 20. Now, we will end up with eight shop visits in total.

What do you look for in an MRO partner?

Honesty from the very beginning about where the bottlenecks may lie is important, and many operators would say the same. We can cope with problems as soon as we are told what’s in front of us. We prefer it when a potential MRO partner doesn’t hide [behind] turnaround time standard numbers. What is very important is the knowledge and understanding [from] an operator of [what] the process looks like and where the bottlenecks could be, along with a thorough understanding of the detail within the contract.

What kind of maintenance contracts do you favor with your MRO partners?

Time and material contracts give the most flexibility because you don’t have any batches of engines constraining [you] and you can easily build some bonuses around the number of engines, which can easily be reduced or increased in number. We have full control over the material, which is removed and can then be utilized for our own purposes. If we have a longer shop visit wait, we can use parts from one engine, get them repaired and installed on another engine. So we both benefit from the parts management during the duration of that contract. Our regional fleet and their CF34-8 and CF34-10 engines are covered with time-and-material agreements. For our narrowbody engines, such as the CFM56-7B, we tend to have agreements for a fixed-price contract that [we] won’t exceed. This is because we don’t really have much experience with this engine, but I don’t think many airlines do—as these engines are just about to come through performance-restoration shop visits. Fixed-price contracts give us a better level of predictiveness for these engine types, and budgetary planning is made easier with this greater visibility.

Have you experienced any supply challenges this year? How has that affected your operation?

It’s different for every fleet we have because the contracts we secure are of a different nature and often involve different suppliers. For example: On our [Boeing] 737 MAX aircraft fleet, engine components [and] accessories are covered by a pooling agreement with AFI KLM E&M, while on the 787’s Rolls-Royce Trent 1000 engine, we have a TotalCare package in place to cover all accessories or line-replaceable units. Rolls-Royce has a huge network and huge potential for bringing parts from the other side of the world because they have consignment stores, and they’ve done a good job in supporting us for the Trent 1000 engine program. Undoubtedly, it is shop visits that are seeing the most delays due to the delay in the MRO [provider] being able to get parts either from the OEM or a third-party supplier. This is different [from] line maintenance, where we aren’t seeing issues for the supply of parts.

What is the airline’s strategy around spare engines?

Except for the LEAP engines for the MAX, we keep around the typical 10% of the engine fleet as spares. Although this is dependent on the season and the volume of shop-visit campaigns; we increase that number from time to time. On a mature fleet, we have long-term lease agreements [that] cover this 10%, [which] gives us flexibility, comfort of operations and visibility of scheduled shop visits. For the E195, we have three long-term leased engines and on top of that we have another four on short-term lease to cover any gaps. The positive about sourcing engines is that they have been there for us on the market. We didn’t struggle to find any.

Have you seen any asset price fluctuations, and what is your strategy for green-time engines?

During the pandemic the prices of assets went down as many lessors saw their engines come off lease and they were looking to place them somewhere else. For the green-time engine market, it’s been a good couple of years because many operators want to spend time on management rather than do overhauls or performance restoration shop visits. We don’t have many green-time engines in our fleet now, as we didn’t see any benefit from low demand for spare engines during the pandemic because we already had our own contracted. Asset pricing is returning back to pre-COVID levels, and we can see this on different platforms from the CFM56-7B [to the] CF34-10, which in some cases are even surpassing precrisis levels. During the crisis, it was important for everyone to make good deals and secure their futures, which we actively set out to do. What our senior management did do was convince lessors we should rebuild our lease contracts to move away from a lease rent and build it around the power--by-the-hour structure instead. We aren’t the only airlines doing this—as it was a popular move during the pandemic—and we are seeing the benefits right now. Some leases were contracted for many years ahead, so they will stay with us now for several years. Although now, a growing number of lessors are starting to step back from this strategy and no longer want to lease engines on this basis.

Access to skilled labor is a challenge throughout most parts of the world, albeit manifesting itself in different ways. What is LOT’s experience of this issue in Poland?

In Poland it doesn’t really affect shop visit planning. In fact, in recent times, my team undertaking this function has grown in numbers. At our local repair shop in Warsaw, yes, they are suffering from a shortage in manpower. While it isn’t so bad that they’d refuse any of our maintenance requests, it can often take a bit longer to turn around due to these shortages. We see the labor issue impacting the locations across the world where we send our engines for shop visits. It doesn’t matter whether it’s Germany, the U.S. or Singapore, we’re seeing it on different scales depending on the shop size. But we recognize the fact that they are missing people who left the company over the past 2.5 years.

LOT Polish Airlines

History: LOT Polish Airlines was founded in 1928 by the Polish government to take over services from Poland-based domestic airlines Aerolot and Aero. Its first flight took place the following year. After World War II, the airline flew mostly Soviet-built aircraft up to the fall of the communist republic in 1989. After that, LOT started flying Western-built aircraft and acquired its first Boeing 767-200 in April 1989. Since 2018, LOT Polish Airlines has been part of the state-owned ­holding company Polish Aviation Group, which also includes LOT Aircraft Maintenance Services, LS Airport Services and LS Technics under its ownership.

Fleet: The airline operates a mixed fleet of narrowbody, widebody and regional aircraft totaling more than 75. These include Boeing 737-800 and 737 MAX 8 narrowbody and 787-8 and 787-9 widebody aircraft. It also operates ­multiple variants of Embraer E-Jets and De Havilland Canada Dash 8 regional aircraft.

MRO: LOT outsources much of its maintenance to third parties and works with a selection of OEM aftermarket divisions and MRO providers.