While new deliveries of the largest GE90 engines are scheduled to end around 2020 with the phase-out of the original Boeing 777 series, from an aftermarket perspective “Growth” remains an apt moniker for the engine family’s larger variants.
Shop visits for GE90-100/-115B models—the GE90 family’s Growth variant—totaled about 330 in 2014, and the 12-month rolling average through November 2015 was 318 annual shop visits. Aviation Week’s 2016 Commercial Fleet & MRO Forecast indicates this figure will rise steadily throughout the next decade, surpassing 500 in 2022 and topping out at about 588 in 2025. The annual average for the 10-year period is 405, according to the forecast.
Regionally, demand will rise sharply in the Middle East and Asia-Pacific—two high-demand, long-haul-heavy air transport markets that leverage the 777-200LR and -300ER, which are powered exclusively by GE90 Growth engines. Overhauls for Middle East-based carriers will rise—to 160 in 2025 from about 60 this year, while Asia-Pacific airlines—excluding China’s carriers—will see overhaul demand shift to 184 in a decade from 104 in 2016, including a demand dip in the 2017-20 period (see table).
Figures from MTU, which has been servicing Growth engines since 2011, show a similar across-the-board increase, projecting about 500 shop visits by 2022 and rising slightly through 2025. Analysts from Canaccord Genuity are particularly bullish on 2016’s prospects, estimating year-over-year growth of “close to double digits for GE and the few other shops that [perform] GE90 engine overhauls.”
The steady rise in overhaul demand will put significant revenue in play over the next decade. Aviation Week data project $30.7 billion in GE90 Growth overhaul demand, reflecting 87% of the total GE90 market of $35.4 billion. Annual GE90 Growth demand figures will start at about $1.8 billion this year and reach $4.3 billion in 2025.
Regionally, operators in the Middle East will generate about a third of the demand, dollar-wise, totaling $10.0 billion during the decade. Asia-Pacific will be a close second, at $8.8 billion, while the next three on the list—Western Europe ($3.7 billion), North America ($3.3 billion) and China ($2.0 billion)—will combine to match Asia-Pacific’s total.
With seven MRO shops capable of full service on the Growth engines and an eighth, Air India, slated to join the list soon, a capacity crunch at the top of the supply chain is not expected. MTU’s capabilities include handling more than 20 performance restoration visits, with the ability to ramp up significantly to meet demand.
“Depending on further customer acquisition, we plan to increase capacity to about 50 shop visits a year until the end of the decade,” says Norbert Moeck, MTU’s engine programs director.
While capacity is not problematic for overhaul providers, turnaround times are being hampered farther down the supply chain.
“[T]here are ongoing capacity constraints at single-source piece-part repair suppliers, for example for rotating parts,” explains Moeck. “This can have a negative impact on shop-visit turnaround times, as well as overall capacity levels.”
The GE90 Growth fleet remains relatively young from an aftermarket maturation standpoint. Figures from GE had 1,751 engines in service as of December 2015, with more than 400 on backlog. The average age of the in-service fleet is about 4.7 years, meaning most shop visits in the next few years are the initial off-wing events. These augment the initial quick-turn visits to boost lessons learned and help improve long-term engine reliability.
“Over the last few years, we have observed a shift in workscopes for the GE90 Growth—from so-called quick-turn and repair visits to first-performance restoration visits,” says Moeck. “The quick-turn visits provided the opportunity to install improved materials and fix early in-service life issues.”
The fleet’s relatively young age means another sea change lies ahead: widespread adoption of used serviceable material (USM). But while MRO providers anticipate opting for used parts to lower customer costs on the GE90 as they have on older models, the effort will not start for several years.
“We do not expect any significant availability of used serviceable material until the beginning of the decade, when first aircraft will be retired,” Moeck says. “Having a strong experience with a USM sourcing on other programs, like the CF6-80C2, we will of course try to tap into that market as early as we can.”
With most GE90 Growth engines approaching or just out of their initial major shop visits, the majority of customers are on long-term, power-by-the-hour contracts. Off-wing overhauls take several months—MTU’s turn times are 90-100 days—meaning spare engine support is a must. Most providers offer spares as part of long-term agreements or on an as-needed basis for time-and-materials jobs.
MTU also offers membership in a pooling arrangement that includes access to two engines that it owns. Pool participants pay monthly fees to use pool engines, and have the option of making their own engines available to other pool members.
The arrangement is attractive to smaller operators because it takes the place of having to invest in spare engines and major components, according to MTU. Larger operators with excess engines can place them into the pool and create a revenue stream without putting their aircraft reliability at risk.
The desire to keep aircraft in service and minimize aftermarket spending has airlines caught up in an unrelenting quest for greater efficiency, which is putting pressure on MRO providers. “We believe airlines have been able to lower inventory levels (including greater use of pooling agreements), they are increasingly finding creative ways to defer maintenance spending, they are using lower-cost surplus material more, and they have taken a new approach to their MRO spending and business models,” analysts at Canaccord Genuity note.
While the shift means MRO providers are feeling more pressure, innovative suppliers can benefit from this newly created opportunity. For instance, Air France Industries KLM Maintenance & Engineering has developed a repair for GE90 Growth fan hub frames that is $1.5 million cheaper than the alternative of installing a new part, and it can be completed in 21 days.
Meanwhile, GE is introducing a package of performance improvements as part of a larger upgrade for the 777-200LR/-300ER to help ensure that the last aircraft off the line is more appealing to airlines. GE’s share of the upgrades includes 13 changes, some of which are already on engines being delivered on new aircraft. By July, new engines will have the full package, which GE says will improve fuel burn by 0.5%. The engine maker is making the package retrofittable during scheduled overhauls, giving customers a cost-effective way to incorporate the upgrades.