Leasing companies are turning their attention to CFM’s Leap engine. MR-Lease-CFM International

Leap, GTF Engines Attract Greater Interest From Lessors

Leap, GTF attract lessor interest, but other types do as well.

Printed headline: Lessors Welcome New Engine Entrants

With next-generation engine types—the CFM International Leap and the Pratt & Whitney geared turbofan (GTF)— having a combined order backlog of nearly 20,000 units, engine lessors are anticipating acquiring greater numbers for their portfolios over the next decade.

At a six-person panel discussion of the engine leasing and finance market at Aviation Week Network’s Engine Leasing, Trading and Finance (ELTF) in London in May, lessors saw opportunities around both the Leap and GTF engine types, in addition to steady demand for established options such as the CFM56 family and GE Aviation’s GE90.

Pat Laffan, senior vice president for structured finance at GE Capital Aviation Services (GECAS), said the company will focus on GE and CFM engine types in future, primarily in the sale-and-leaseback market, but would consider looking at other engine types should the returns be beneficial.

Julie Dickerson, managing director of Ireland-based Shannon Engine Support, a company that does not chase sale-and-leaseback arrangements, expects a greater focus on the early-year period for Leap engines as they enter service, along with a continued emphasis on mature CFM56 engine types.

CFM International

 Leasing companies are turning their attention to CFM’s Leap engine (pictured) and Pratt & Whitney’s geared turbofan, which are expected to power a sizable share of the global narrowbody aircraft fleet. Credit: CFM International

“For the early years, the focus is on supporting CFM engines going into service before we eventually start to see shop visits or other necessary requirements,” Dickerson said.

The Leap is expected to be among the dominant narrowbody engine types of the next decade, with Aviation Week’s Fleet & MRO Forecast estimating that 20,046 units will be in service by 2026. By then, this number will have surpassed the CFM56 family, which is expected by the same forecast to have 19,404 engines in the global fleet.

The widebody engine market is also an area of focus for some lessors. Having found success with sales and aftermarket coverage of the Rolls-Royce Trent XWB engine, Bobby Janagan, vice president and general manager at Rolls-Royce and Partners Finance, conceded that associated costs with the engine type could be high but nevertheless are still similar to those of another widebody engine type, the GE90.

Speaking from the perspective of an independent lessor on the XWB, Dan Coulcher, senior vice president and chief commercial officer for Europe, the Middle East and Africa at Willis Lease Finance Corp., wondered if there would be a competitive aftermarket for the Trent XWB powering the Airbus A350, which went into service with Qatar Airways in January 2015.

He also sees entry-into-service challenges around Pratt’s GTF—which have resulted in delays in deliveries— as a concern for would-be investors due to questions over changes to bills of materials on the engine.

Another trend Coulcher is seeing is a change in the buying habits of operators on new engine types, specifically from airlines. “Because of the reliability of all the major narrowbodies, a lot of our airline customers are pushing back ordering spare parts for new-generation aircraft, which is something we never thought would happen.”

Meanwhile, Les Cronin, head of global engine leasing at MTU Maintenance Lease Services, which has focused on short-to-medium-term leases since being established in 2014, has seen a shift in the cooperation between the German company’s leasing business and its MRO division.

“In the past two years, we’ve experienced tremendous support from colleagues in the MRO business that we would previously have seen as competitors,” he says. “They are calling on our services for their MRO support, and this has undoubtedly been a positive development for both parties.” 

 

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