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Power trip | Low Cost & Regional Airline Business

3 May 2017

Engine leasing remains a popular activity, especially with some aircraft staying in service longer.

In the past 12 months AJW Leasing (AJWL) has seen the market change considerably with the V2500-A5 ‘leading’ market demand at present due to the decreased availability of this engine type. Alun Roberts, Engine Leasing Manager says the reduction in spare engine production and traders, as well as an increase in shop visits and OEMs purchasing engines to support airlines during the shop visit, are driving the lease rates up significantly for this type of engine.

 

Roberts reports that in the last three years, lease rates for a V2500-A5 have increased by around 60%. "The V2500, CFM56-5B and -7B engines are holding their residual values best, due to shop visit requirements, which translate either into short term leases to support the airlines, or the aftermarket parts supply for the visits. We are seeing the largest drop in value of the CFM56-3C1 in terms of material supply."

Instead of relying on declining parts sales pricing, lower material pricing over the last two years has allowed AJWL to take advantage of these trends to convert material more readily into whole assets that are capable of generating lease revenue.

 

No doubt maturing engines are staying in service longer, and having these engines flying for longer periods, some say, might bring concerns with supply and availability.

 

 

Read the full article here

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