Before the COVID-19 crisis stalled the growth of the commercial aftermarket, demand for the International Aero Engines (IAE)-manufactured V2500-family engine, an option for the Airbus A320, was predicted to remain robust in the long term. Back in 2019, operators would commonly mention that finding an engine slot for an overhaul or repair was one of their primary challenges, with parts shortages from the OEMs and heightened demand for current-generation narrowbody equipment contributing factors.
However, given the novel coronavirus crisis, the dynamics of the market have changed this year, leading airlines to defer or cancel costly engine shop visits as a means of preserving liquidity. As a result, the engine aftermarket likely will see a sharp decline in shop visits this year, a slowdown already identified by OEMs and independent MROs. A September poll conducted by Aviation Week Network’s Aero Engines Europe also suggests this trend, with 35% of respondents predicting a 40%-50% drop in shop visits in 2020.
This is supported by Aviation Week Network Commercial Fleet & MRO Forecast data revised for COVID-19, which anticipates a steady decline in MRO spending and fleet numbers over the course of this decade as the V2500 market gradually transitions to its PW1000G successor. As of next year, the newly revised figure of 2,784 in-service V2500s is expected to be reduced to approximately 2,049 by 2029. In the second quarter of 2020, Pratt & Whitney says demand for the V2500 fell around 60%. This may reflect trends in the wider engine MRO sector, which saw an estimated revenue drop of 50-60% in the second quarter, according to an analysis by consultancy IBA.
One bright spot among the downturn is more requests for engine preservation support, with more module exchanges and minor MRO tasks expected. Lessors are also seeing some buoyant activity, particularly in areas such as V2500 component demand. “We’ve seen a lot of requests for V2500 parts that we don’t yet have for part-out [though we] do own engines that are still on their lease,” Anca Mihalache, vice president for engine trading at APOC Aviation, said during a panel discussion at Aviation Week’s Aero Engines Europe in September.
Greentime engine requests for powerplants like the V2500 have also increased during the pandemic. Typically, this has emanated from lessors looking to postpone shop visits rather than airlines, said Fabrizio Laurenti, senior manager for engine lease at MTU Maintenance Lease Services, which specializes in short-term leases of more than four months. He expects the greentime trend to persist if cash remains short and price reductions continue.
Newer variants of the V2500, alongside its CFM56 competitor, are likely to continue returning to service as airlines gradually increase their flights starting with short-haul routes. Speaking of the Airbus fleet, Paul Richardson, vice president of sales at AAR, says: “It’s important to remember that 75% of Airbus A320ceos are under 15 years old, so taking into consideration the age side of things, half of those engines haven’t had their first shop visits yet.”
However, some older V2500 models could make good teardown candidates, although a post-COVID-19 wave of teardowns—both for aircraft and engines—is not anticipated initially. Aviation Week predicts V2500s will retire at a steady pace over the next decade. About 58 will be retired next year, with an estimated 160 units returning from storage. Retirements for the V2500 are expected to peak at 242 in 2026.
The expectation is that plenty of shop visits will come due once some semblance of normality returns to the market, something that is already being seen for engines like the V2500 as short-haul flying increased in recent months. Abu Dhabi-based Sanad Aerotech, anticipating this trend, has moved to adjust its capacity accordingly. In late September, the company signed a new $272 million agreement with Pratt & Whitney to increase services for the V2500.
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