Third-quarter earnings are just heating up, but those watching the commercial aftermarket can expect consistently solid engine aftermarket-related figures.
GE started the season off by reporting commercial spares demand was up 21% to $23 million per day in sales, and there should be plenty more good news ahead. Older models, including the latest versions of the venerable CFM56 and V2500, are the primary drivers. But the push to keep aircraft flying, as well as the steady maturation of some newer products, means some less-familiar engine types will be lauded as tailwind-providers by their supply-chain members.
Among them: the CF6, which has seen a resurgence in the last few years, primarily thanks to the 767's resurrection as both a cheap passenger-carrying alternative to newer widebodies and an inexpensive freighter.
"We have heard that it is difficult, if not impossible, to find CF6 engines…as these engines are not getting parted out as much as they have been, especially as 767 aircraft usage remains relatively high," writes Canaccord Genuity analyst Ken Herbert.
The surge in demand for older engines is putting pressure on both lease rates and material pricing, Herbert adds.
"There continues to be a lack of used material (feedstock) for some platforms, such as CFM56-5B and -7B engines," he says. "While we have heard that you can find these, the prices are higher, which limits margin on the part-out on these assets."
On the other end, GenX shop visits are beginning to ramp up—the start of what will be a surge of next-generation widebody engine overhaul work that will soon include the Rolls-Royce Trent 1000 and XWB.
While engine-material demand will remain strong, production ramp-ups could help shake loose some older equipment as newer aircraft are delivered, supplanting some existing lift. However, Herbert notes, the continued attractiveness of the in-service aircraft could put pricing pressure on new metal before the retirement slowdown begins to ease.
Cancaccord's estimates have the industry on track to remove just 300 aircraft from the large transport fleet this year, a 14% decline on an already-low figure.