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Aero Engine Parts:
Repair or Replace?Evaluating the current fleet
David Hygate SVP Business DevelopmentMarch 24 th 2010
Hamburg
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Identifying the critical success factorsl Assessing the current
engine orders and deferral trendsAssessing the current engine
orders and deferral trendsl What is the active fleet in terms of
populations of differentWhat is the active fleet in terms of
populations of different
engine types?engine types?l Forecasting the impact of the
changing average engine age onForecasting the impact of the
changing average engine age on
the maintenance requirementthe maintenance requirementl
Understanding the effect the changing average engine age
willUnderstanding the effect the changing average engine age
will
have on parts availabilityhave on parts availability
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Worlds airlines operate over 45,000western engines today
Current fleet
On order/option
In storage or temporarily inactive
Retired or destroyed
Engines x 10,000
Source data: OAG, Feb 2010
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Program delays and recession havepushed back wave of engine
deliveries
Options
Source data: OAG, Feb 2010
P ote ntia l intr oduction of upgr a de d s ingle -a is le v a r
ia nts could ca us e s w itchingof ba cklog to ne w e r ty pe s
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Order backlog dominated by CFMIand GE
CFMI
GE
EAIAE
PW
RR
PJ
Source data: OAG, Feb 2010
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Engines of growth:
Engine order backlog February 2010
Source data: OAG, Feb 2010
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Both the old and the new presentopportunities
Growth engines promisebig market for the future
+ Early adopter advantage
- New parts- OEM strong- Limited repairability- Potential
upgrade of SA a/c
-
Legacy engines offer attractive option
+ Engines for parting out
+ Exchange programs+ Used parts+ Developed repairability+
Dispersed customer base
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Maintenance requirement in earlyyears can be managed well by
OEMs
Fleet-wide long-term maintenance contracts
Invest for long MTBR and lowest $/hour
New products
First users
New material
Few repairs
New Engine age OldNew Engine age Old
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Later years favour bespoke micro-management of individual
engines
Older product Older product
Used material Used material
Extensive repairsExtensive repairs
Focus on lowest $/shop visit Focus on lowest $/shop visit
Uncertain commitment to typeUncertain commitment to type
Short-term Time and Material contractsShort-term Time and
Material contracts
New Engine age OldNew Engine age Old
Invest for long MTBR and lowest $/hour
Long-term maintenance contracts
New products
First users
New material
Few repairs
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Typical engine life cycle average of several types
% oftotaldeliveredfleetstillactive
Years from EIS of program
Inflexion point
20 years
Source data: OAG, Feb 2010
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Another 3000 engines will become 20years or older in the next
five years
Source data: SAI, Feb 2010
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Engines on the edge of a nervousbreakdown
Source data: SAI, Feb 2010
s n n s oul lso mp te e gi e c d a be i ac ed b y A320/737
des
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A320/737 re-engining could:
l Reduce values of current aircraft andengine models
l Cause current orders to be transferred to
new typesand in so doing
l Reduce attractiveness of MRO market for
growth enginesl Stimulate T&M opportunities as moreengines
are phased out earlier
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Picking the best engine segment
l Availability of used materiall Scope for in-house parts repair
l Low % of market served by OEMl Large customer base
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Key success factors when managingengines to a lowest $/SV
budget
AA LL
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Thank you,any [email protected]
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