Engine Manufacturers Hold the Key...
Following Commercial Aviation's Resurgence with Passenger Traffic Surpassing Pre-Pandemic Levels, Engine Manufacturers Hold the Key to Rapid Production Ramp-Up by the Aircraft OEMs.
COMMERCIAL AVIATION
The Global Commercial Aviation Turbofan engines market has been in a state of flux post-pandemic with strong passenger traffic & fleet utilization recovery in commercial aviation which has now even surpassed the pre-2019 level, spearheaded by the narrow body segment, leading to surging demand for new engines as well as engine MRO activity while supply chain & capacity constraints along with skilled workforce shortages on the supply side, which are likely to persist at least through early to mid-2026, have rendered it almost impossible for the engine OEMs to be able to meet that level of demand. The situation has become further acute as the in-service, older generation engines, namely, CFM56-3, 5B & 7B and the V2500; are also due for maintenance simultaneously, ranging from initial shop visits for the V2500 to heavy maintenance for the CFM56; and given that the MRO activity volumes for these older generation engines are going to be substantial over near term.
Further, teething troubles & durability issues over latest generation engines, including, both CFM’s LEAP and Pratt & Whitney’s GTF engine family, have hit the carriers hard, especially over GTF's issues with almost 350 GTF engines scheduled to be grounded annually to receive fixes through 2026, as per regulatory mandates, which have compounded the issues being faced by the carriers as rental & spare engines, too, have become scarce. The in-service fleet of CFM’s LEAP engines, too, is receiving retrofit kits, featuring a reverse bleed system, to tackle carbon deposit issues to increase on-wing time while Airbus is exhorting CFM to stick to delivery schedules of the LEAP-1A engines to the A320neo family FALs to avoid further disruption to production. In the wide body segment, Rolls Royce, too, has been grappling with similar durability issues on its Trent 1000 & XWB-97 engine programs and is on track to resolve them by 2026 amid steadily improving fleet utilization levels in the wide body segment.
The surging demand for new aircrafts in the narrow body segment has spurred the need for production rate ramp-ups across OEMs who chalked out plans for ambitious rate increases over leading single aisle programs in 2022 & 2023. However, supply chain constraints, especially at the engine OEMs level, are not in a position to be able to support any kind of rate increases going forward as engine deliveries by them to the OEMs are still below the 2019 levels. Among narrow body aircraft programs, Airbus’ A321XLR is scheduled for certification and EIS in the second-half of 2024 while Boeing’s 737 MAX program is being produced at a level of 38 aircrafts per month, as per FAA’s mandate, to ensure quality improvements for enhanced safety. Airbus is, now, gunning ambitiously for a production rate increase to 75 aircrafts per month for the A320neo family in 2027, after having faltered over the same earlier owing to supply chain issues, while it will take another 2-3 years for Boeing to reach its former peak production level cumulatively while facing a plethora of issues ranging from regulatory, financial with rising debt & interest payouts, operational performance across programs to imminent leadership transition.
Thus, post-pandemic supply chain issues combined with durability issues on current generation engines and older generation engines becoming due for maintenance along with frantic demands from the aircraft OEMs to increase production levels while also being required to invest towards R&D to develop sustainable technology solutions for commercial aviation’s future; have collectively created a sort of Gordian knot for the engine OEMs, which will take at least another couple of years to be resolved. The engine OEMs, along with their industry partners, are currently investing substantially towards MRO capacity & capability addition to meet surging demand levels from the carriers. For instance, GE has just announced an investment of $1 billion through 2029 towards expanding capacity at its existing global MRO sites and setting up new facilities across key regions globally to equip itself for the upcoming, scheduled maintenance requirements of LEAP engines. The long-term market fundamentals, thus, remain bullish with strong long-term aircraft deliveries and fleet growth projections by the industry.
About the Author: Rajat Narang is the Co-Founder & Partner of Noealt Corporate Services apart from being an A&D Industry Researcher & Specialist, Serial Author and Nuclear, Aviation & Cold-War Historian. For his full bio and list of books authored by him, access his author page on Amazon.com.
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