Engine lessor and spare parts provider Willis Lease Finance has suffered from falling demand for maintenance as its leasing and sales revenues plummeted in the third quarter.
Compared with last year, spare parts sales were down 88%, lease rent revenues were down 39% and operating profit was down 84% at $4.6 million for the three months to Sept. 30.
“The slowdown in global travel has led to a reduction in aircraft and engine utilization as well as a reduction in demand for aircraft and engine spare parts, which keep airline fleets in operation,” says the Florida-based company.
As sales dried up through the first nine months of 2020, Willis’s spare parts inventory grew from $42 million to $55 million.
Rival lessor Engine Lease Finance (ELFC) has noted that spare engine inventories are also likely to remain high for some time.
“With the continuing uncertainty around travel restrictions, very few of the world’s airlines are able to forecast or support any demand for spare engines in this current phase of the crisis,” ELFC President and CEO Tom Barrett tells Aviation Week.
“This means that the engine lessors’ ‘period in inventory’ will be lengthening and the experience of recent years where demand exceeded supply has now reversed a full 180 degrees,” says Barrett.
Nonetheless, Willis believes it can benefit from the crisis by providing airlines with liquidity options.
“As our customers begin to settle into the pandemic-affected landscape, we believe our multi-faceted role in providing liquidity options for airlines, helping them reduce costs by avoiding maintenance spend, and also assisting their efforts to plan for the future will become even more important,” says Willis President Brian Hole.
