Chromalloy CEO: Market ‘Bifurcation’ Positive For Engine PMA Acceptance

TAMPA—Operators desperate to keep their mid-life narrowbodies flying are increasingly looking at alternative parts strategies for high-value engine material, prioritizing on-wing time over asset resale value concerns, Chromalloy CEO Chris Celtruda said.

“When you start looking at utilization of midlife assets like the CFM56 and the V2500, there’s a growing sense that it’s really about cost of ownership, not residual value,” Celtruda told Aviation Week AeroEngines Americas attendees Feb. 10. “There’s a bifurcation of the market.”

Owners of lower-time engines may still give considerable weight to residual values and opt for OEM parts as a result. But some high-demand parts are in short supply due to broader issues that have driven up demand for current-generation engine parts as OEMs increase production.

“There is a lack of availability of high pressure turbine blades in the market right now,” Celtruda said. For operators of midlife engines, the wait time for a set of new turbine blades may not be worth the asset-value preservation benefits. Such scenarios help drive Chromalloy’s increasingly aggressive parts manufacturer approval (PMA) development strategy.

Long a producer of gas-path PMA parts, the company has boosted its efforts on in-demand CFM56 and V2500 hot section material. Its V2500 PMA offerings, which include deals with Lufthansa Technik for both parts and Chromalloy-developed repairs, expanded with the recently approved V2500 SelectOne eighth Stage compressor blade, the company said Feb. 10.

Demand for the V2500 and CFM56 remains strong, due in large part to years of new-aircraft delivery shortfalls from Airbus and Boeing that have forced operators to keep older A320s and 737s flying.

The new-aircraft delays are due in large part to engine material challenges. As engine OEMs configure their supply chain to prioritize current-generation products, one ramification is lower spare parts production for older-generation engines. In response, operators are exploring alternatives, including PMA parts, even for leased assets.

“Historically, there’s been a sense that inclusion of PMA in a lessor-owned asset diminishes or causes a question about residual value. I think that that could be true if it’s a newer asset [or] asset that doesn’t have a large number of cycles on it," Celtruda said. “I think it’s absolute, utter hogwash when it comes to older assets.

“When you have a midlife engine that has [a low number of] cycles remaining on it, I don’t really think you’re too worried about residual value,” he continued. “When you run out the [life-limited parts], you got $1.5 million of scrap metal and used serviceable material. Nobody is going to buy that and restore it. They’re going to part it out.”