Anyone seeking evidence that sustained low fuel prices are giving older aircraft new lives need look no further than the Pratt & Whitney PW4000 engine fleet.
Spares sales for the family were up in the first quarter of 2016, providing a welcome boost in a market from which P&W executives are not expecting much as older, PW4000-powered aircraft—including MD-11s, Boeing 747-400s, and older 767s and 777s—edge closer to retirement.
The PW4000’s resurgence comes at a welcome time for the engine-maker. During a March investor meeting, the company pegged its near-term total aftermarket compound annual growth rate (CAGR) at a pedestrian 3% through the end of the decade, until the PW1000 overhaul market begins to kick in.
“We see our legacy PW4000 retiring, and the V2500 will begin to flatten out as deliveries slow with the transition from the A320ceo to the A320-neo,” says Bob Leduc, Pratt’s president.
Macro figures underscore that a renaissance in legacy widebodies like the Boeing 767 and older Airbus A330s is likely to be short-lived. UBS, which tracks retirements closely, noted a 2% year-over-year increase in parked widebodies at the end of June, driven by more 767, 777 and Airbus A330 retirements. The culprit, says UBS: widebody overcapacity.
Thanks to the PW1000’s position on several narrowbody programs that are ramping up, notably the A320neo and Bombardier C Series, Pratt’s reliance on widebody flying to generate solid aftermarket returns will soon change. In the early 2020s, the rapid PW1000 ramp-up is expected to push the company’s aftermarket CAGR to near double-digits.
Part of this is a shift in the company’s approach to aftermarket offerings to emphasize fleet management programs. About 40% of the PW4000 fleet—which averages 17 years of age, the OEM’s figures show—is covered under some sort of service agreement. Part of this is related to the fleet’s age—after about 15 years or so, full-coverage programs are rare, though the engine-makers are working to change this with more flexible options that include more used parts and other cost-friendly approaches.
But even the V2500 fleet, which averages eight years of age, is only 60% blanketed by a Pratt-held service contract. The company’s goal for the PW1000 family is 80%—a figure that should be very friendly to its aftermarket services bottom line.
Aviation Week’s Commercial Fleet & MRO Forecast projects a rapid drop-off of PW4000-94s in service. The 1,380 engines flying today—most of them on twinjets like the 767 and A300-600 but also on a handful of four-engine 747-400s and MD-11 trijets—will steadily decline to about 550 by 2025.
The PW4000-100-powered A330 fleet is much smaller, at about 235 aircraft, and is projected to decline by only about 20 aircraft through 2025. This figure includes about 30 projected new A330 deliveries 2016-19.
The 112-in. in-service PW4000-family engines on Boeing 777-200s and -300s will decline from about 160 aircraft today to 70 in a decade.
Forecast MRO events will mirror the fleet population. The A330 engine overhauls will stay relatively steady at about 130 events per year and are projected to be higher in 2025 than in 2016.
The 94-in. family’s overhaul forecast projects 246 events in 2016 and jumps to 307 in 2017, followed by a steady decline to just more than 100 shop visits in 2025.
Overhauls for the 112-in. engines started off strong at about 150 this year. The forecast sees them fluctuating at 100-130 through 2020 and then declining to just 56 in 2025.