Engine Market Strains To Boost Capacity Amid Long Turnaround Times

The health of the aerospace engine maintenance market comes down to perspective: OEMs and independent MRO providers are enjoying a glut of business as older engines run longer, but airlines are suffering from extended turnaround times as maintenance capacity and material supply struggle to keep pace with demand.

Perhaps the most important dynamic concerns the extended service lives of CFM International CFM56 and IAE V2500 engines as airlines seek to bridge capacity shortages caused by delayed deliveries of new-generation Airbus A320neo and Boeing 737 MAX aircraft and by durability issues with their Pratt & Whitney PW1100G and CFM International Leap 1A and 1B engines.

This benefits the independent engine maintenance market, which tends to focus on CFM56 and V2500 engines, and the OEMs, which receive a larger share of the most profitable time-and-materials work as older equipment drifts out of full-service, flight-hour-based support contracts.

This trend is set to continue, with GE Aerospace predicting that shop visits for the market-leading CFM56 will peak in 2025 and remain at roughly the same level for another two years. The second-quarter operating profit growth of 21% for the company’s commercial engines and services division this year was driven by a 14% rise in services revenue to $4.7 billion.

“The shop visits skewed toward time-and-material work, and then the workscopes were heavier as well,” GE Aerospace Chief Financial Officer Rahul Ghai explained on a recent earnings call. “And that helped both revenue and the profit on those shop visits.”

While this is good news for GE and other maintenance providers, the picture is different for airlines, with Bain & Co. predicting that engine MRO capacity will fail to meet demand through the end of this decade and warning that the sector has “become a choke point for commercial aviation.”

The consultancy highlighted new aircraft delivery delays, supply chain and parts supply problems and pent-up maintenance demand from the COVID-19 pandemic for the imbalance and forecast that 2026 would be a crunch year for engine maintenance, when demand is likely to exceed supply by the most.

Bain & Co. also warned that if engine MRO capacity growth continues along its historical trajectory, a considerable maintenance capacity shortfall will occur in 2030 as new-generation engines reach their first shop visits.

On the Shop Floor

“We are seeing strong demand across all of our engine lines, and we are continuing to add capacity, especially for the CFM56-7B at [Dallas-Forth Worth] International Airport and the Leap 1A and 1B at San Antonio,” says Will Pitcher, StandardAero’s senior vice president of sales, marketing and customers. “We expect to see demand remain robust for the foreseeable future.”

The view from Europe is the same, with Lufthansa Technik (LHT) pushing to ramp up engine maintenance capacity in response to a buoyant market.

“On legacy engines, the peak of CFM56 shop visits and a continued high demand for the next years requires a consistently large team on the shop floor,” observes Martin Mueller, head of business development engine services at LHT.

Other service providers also are doing well. Estonia-based Magnetic MRO focuses on engine hospital visits and quick repairs, which means its shop was full even during the pandemic, when many airlines avoided expensive full overhauls in a bid to conserve cash.

"Delivery delays and problems with new-gen engines have significantly boosted maintenance demand for current-gen equipment,” says Filip Stanisic, head of Magnetic Engines. “We can see that the pressure continues to rise, [and we] do not expect that the situation will change significantly in the next three years.”

While airlines will welcome these developments, the delays extend beyond the shop floor. Bain & Co. estimates that while shop visits of legacy engines are 50% longer than in 2019, at 120 days now, total wing-to-wing turnaround time (TAT)—from removal to reinstallation of an engine—is also 50% longer, at up to 210 days, as engines queue up for maintenance. Airlines are waiting even longer—up to 300 days—for new-generation engines to return.

At StandardAero, Pitcher notes that TATs vary according to engine or auxiliary power unit type. “We do, unfortunately, have engines awaiting induction at a number of facilities due both to strong demand and continuing supply chain issues,” he says. “We work hard to help customers anticipate their shop visit requirements as far out as possible.”

Magnetic MRO also reports queueing. “Yes, there are some engines that are waiting for inductions in our storage, with a waiting period of up to three weeks, but if the customer needs an engine fast, we are doing our utmost to fulfill that need,” Stanisic says.

What Is Driving Delays?

While aviation supply chain stresses have probably peaked, few within the industry expect them to be fully resolved within the next two years.

“Supply chain issues for new material and subcontracted repairs are still challenging, as the global capacity shortage within the industry remains,” Mueller explains. He says LHT is working closely with OEMs and suppliers and “has established joint measures and enhancement programs to improve the situation and is confident that they will be sufficient to ensure customers an industry-standard turnaround time.”

Bain & Co. estimates that demand for OEM parts is outpacing supply 10-20%. Some of the longest lead times are for replacement parts for the newest engines as those manufacturers divert production to their engine lines to meet airframer ramp-up goals. Exacerbating the situation is the fact that little to no used serviceable material (USM) or repairs exist for new engines, leaving MRO providers waiting on deliveries of spare parts from the OEMs.

“We are unfortunately continuing to experience long lead times on certain parts, which is driving TATs on a number of our platforms,” Pitcher says. “While such delays are not uncommon on older legacy platforms, the post-COVID supply chain issues are unusual in that they have led to extended lead times on some popular engine products still in production. As such, the MRO industry has found itself competing with the OEMs’ new-build production line for certain parts.”

Another pinch point is labor as MRO providers fight to build back head count and replace the many skilled maintenance technicians who either left during the pandemic or retired shortly after.

“On new engine types, the continuous ramp-up and higher man-hour volume per shop visits compared to legacy engines increase the pressure for skilled personnel,” Mueller says.

Nevertheless, large MRO providers have restored and even expanded their labor pools well. “Recruiting strategies, training concepts and internationalization of our business show good effects,” Mueller notes.

StandardAero, meanwhile, continues to invest in recruitment and training, including in its new San Antonio-based training academy and close relationships with local technical colleges. As a result, it has 1,500 more employees than in 2019, at around 7,500 people.

But smaller organizations, especially specialized repair shops, have found it more difficult to restaff. This has made third-party repairs another bottleneck in the engine aftermarket.

“The problem is in the parts that go outside for repair and the backlog that still exists in the subcontracted repairs,” Ana Bidarra, engine shop planning and control manager for TAP Portugal, said at Aviation Week Network’s Engine Leasing, Trading & Finance Europe conference in London in June.

Alistair Forbes, senior market analyst for MTU Maintenance, noted at the conference that smaller repair providers continue to struggle with labor shortages. “Most of the big people have been able to recruit and train, but some of the smaller outfits are finding it harder to get people in, and that’s where we’re probably seeing the pinch point,” he said. “You can have 99.9% of the parts for an engine, but you can’t dispatch it until you get that last part.”

MRO providers are more optimistic now, however. “With global capacities coming back online, the overall situation and turnaround time of subcontracted repairs are improving,” Mueller says.

Stanisic agrees. “Third-party repairs are still lasting longer than pre-COVID, but TATs for material repair have dropped significantly compared to post-COVID days when they delayed engine repair TAT drastically,” he says. “Most of the repair vendors are doing their best to cope with the demand and return repair TAT to what we had before COVID. On some materials, we are already at the level of 30-40 days, and it’s a huge improvement from the 120-180 days we saw a couple of years ago.”

Optional Solutions

One avenue to mitigate long lead times for new parts is USM, although this market is also under pressure from high demand and fewer teardowns as airlines keep potential part-out candidates in service for longer. Of course, USM is not an option for new-gen engines, which are still many years from their first wave of retirements.

The supply-demand imbalance means that the price of USM on popular engines such as the CFM56 has shot up—Magnetic MRO reports that used high-pressure turbine (HPT) nozzle guide vanes have doubled in price in recent years while HPT blades and low-pressure turbine guide vanes have tripled.

“Pricing has gone up drastically for USM in the last 24 months, and sourcing USM presents certain challenges,” Stanisic says. “In some cases, we were surprised that material that was always available as USM is currently in real shortage. Due to the wave of upcoming shop visits for CFM56 engines, we expect that prices for USM will remain high for the next several years.”

While StandardAero also has experienced price increases, Pitcher says the company “has been able to rely on our in-house asset management subsidiary, PTS Aviation, and its strong industry relationships to help address most of our in-house USM requirements and those of our customers.”

Mueller says LHT pursues a multiple-source strategy for parts procurement, including the purchase of full teardown engines. “So far, Lufthansa Technik has been mostly successful in moderating price increases,” he notes.

For airlines wanting to avoid lengthy TATs for full overhauls, which are exacerbated by a shortage of spare engines, alternative approaches such as module exchanges are gaining popularity. Often the decision to pursue these or lighter workscopes depends on how long an airline expects to operate the engine in question.

“Certain customers—such as those bringing back older aircraft to meet their capacity requirements on an interim basis—are understandably more interested in tailored workscopes to meet their specific cycle requirements, while module swaps may work as a temporary solution for operators who would otherwise face aircraft downtime due to a lack of spare engine assets,” Pitcher says.

Meanwhile, it has become “quite routine” for customers to pursue spare engine modules, Stanisic says, noting that “customers tend to accept more minor workscopes and hospital repairs on CFM56-7B or -5B engines compared to full overhauls to extend their life for a certain time only.”

On the other hand, the economics of alternative approaches start to break down if the engine is to be operated beyond a few years. At that point, a full overhaul may more sense on a cost-per-cycle basis. Choosing an option may come down to how long an operator expects supply chain problems and aircraft delivery delays to persist.

Mueller reports relatively low demand for overhaul alternatives within LHT, but he says the company “expects an increasing demand in the future for narrowbody legacy engines due to their life-cycle phase and the accelerating rollover of the fleet.”

Following its analysis of engine maintenance bottlenecks, Bain & Co. recommends that MRO providers seek scale to cater to larger fleets and improve productivity through better use of technologies such as artificial intelligence. The consultancy also urges investment in USM and repairs.

MRO providers appear to have the same idea. “To reduce the exposure to excessive repair TATs, Lufthansa Technik has adjusted internal repair capacities and increased material stocks for critical parts,” Mueller notes. Pitcher says StandardAero “will be continuing to introduce new technologies to streamline our processes and maximize our production efficiencies while further expanding our service offerings.”

Stanisic says Magnetic is focused on building out its CFM56 and Leap capabilities and on boosting capacity. “We can work on up to six CFM56 simultaneously now, with the goal of working on 12 engines in parallel in 2027,” he says.