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COLLAPSE IN AIR TRAVEL DRIVING DOWN ENGINE VALUES AND MRO DEMAND SAYS IBA

IATA Welcomes Rolls-Royce Commitment to Open Aftermarket Best Practice

 – Widebody engine values drop by up to 50% –

12th October 2020: The collapse in demand for air travel caused by the Covid-19 pandemic has led to a significant decline in engine values, with a knock-on effect on engine MRO, according to data from leading independent aviation consultancy, IBA.

In a recent webinar, IBA outlined how trading volumes for new engines have depressed significantly, with maturing assets (used engines) now being offered at discounts of 30% or more given the distressed state of the market.

In the narrowbody engine market, the values of CFM56 engine variants used for Boeing 737NG and Airbus A320ceo aircraft have dropped up to 12% since the start of the pandemic, according to data from IBA.iQ – the leading platform for aviation intelligence. A greater drop in value has been avoided due to recovering demand in parts of Asia where this engine type is extensively used. 

However, the values of LEAP and PW1100 engines for the next generation Boeing 737MAX and A320neo remain more stable, dropping just 2-4%, and IBA forecasts a longer term complete recovery in values.

The range of value changes in the widebody engine market is much greater, with the value of the Trent 970 engines that power A380 aircraft dropping by up to 50%. By comparison, the Trent XWB engines used for the A350 have dropped in value by just 1%.

The swathe of aircraft groundings at the height of the pandemic, and the engine inactivity that accompanied it, has led to a significant fall in engine shop visits going into winter 2020.

As an example – at the height of the pandemic in April 2020, the number of CFM56 variant engines used on the Boeing 737NG that were grounded peaked at over 8,000. By August, that had dropped to just 2,850.

As a result, 2020 engine shop visits have dropped by up to 70% compared to 2019, and IBA predicts that it will be 2024 before they return to pre-Covid levels.

Phil Seymour, President of IBA, says: “Many key stakeholders from OEMs to lessors, and MROs to the airlines themselves, have been impacted by the fall in engine usage and values thus far in 2020. Whilst we forecast improving engine lease rates in the mid term, this is going to be a tough winter for the aircraft engine marketplace.” 

Source : IBA
https://www.iba.aero

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