This webinar, moderated by Mike Yeomans, and featuring Kane Ray and Jamie Davey, discusses the latest trends in the aviation engine market, highlighting the impacts of increased demand for air travel and OEM/MRO supply chain bottlenecks on aircraft engine values.
Much like the aircraft they power, the trend is for spare engines with existing leases to be extended due to the service extension of current-generation aircraft, increased shop visit demand, new-generation engine quality issues, and a lack of spare parts.
These challenges have caused rises in market values and lease rates with IBA identifying evolving trends for supporting future rises. One of these trends is the expected demand for engine shop visits in the coming years. Lease rates have largely recovered to pre-COVID levels, with the CFM56-7B engine and the V2500-A5 engine families being notable movers. The panellists also discussed the shift in the trading market, the wide-body market, new-generation engine values, and the regional market.
Mike Yeomans, Director - Valuations and Consulting, IBA
Kane Ray, Head of General Aviation and Aftermarket, IBA
Jamie Davey, Manager - Engines & Parts, IBA
Aviation Engine Demand Surge: The aviation engine market is experiencing a surge in demand due to increased air travel and the impact of COVID-19, leading to a rise in lease extensions due to a lack of engine supply.
Engine Supply Shortage Factors: Factors such as increased shop visit demand, new generation engine quality issues, and a lack of spare parts in the MRO world are causing a shortage in engine supply.
Increasing Market Values: Despite the challenges, market values are increasing due to the lack of supply, with even slower-to-recover segments such as the widebody market now experiencing demand, i.e. the General Electric GE90-115B powering the Boeing 777-300ER.
Rising Engine Shop Visits: Engine shop visit demand is on the rise, with the narrowbody fleet expected to see further increases in the upcoming years.
Recovered Lease Rates: Lease rates have recovered to pre-COVID levels for many engine variants, with engines like the CFM56-7B and the V2500-A5 seeing lease rate increases.
Mature Engine Demand Increase: In both narrowbody and widebody markets, service extensions for mature aircraft have led to some significant increases in market values. This is most evident for mature engine variants with existing passenger fleets.
Turboprop Engines Demand: The regional market is experiencing an increase in demand for turboprop engines, impacting market values and lease rates, with operators trying to find lift wherever possible.
"The (engine) leasing market is currently experiencing a lot of lease extensions due to a lack of engine supply, particularly for current generation engines. This lack of supply is being caused by factors such as increased shop visit demand, new-generation engine quality issues, and a lack of spare parts in the MRO world. Despite these challenges, market values are increasing due to the lack of supply.”
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