Daily Memo: Current-Generation Equipment Headaches Are Flattening The CFM56 Overhaul Peak

Challenges with new-generation aircraft are providing plenty of headaches for affected operators and aftermarket providers.

Aircraft and engines that were supposed to be retired and tagged for teardown are filling gaps created by delayed or not-yet-certified 737 MAXs or grounded Pratt & Whitney-powered aircraft, to name the two most obvious culprits.

No set of stakeholders is more affected than the one that supports the CFM56. The venerable engine that powers the entire Boeing 737 Next Generation fleet and a solid portion of the Airbus A320ceos is expected to generate nearly 30% of all engine MRO demand in 2024, a Naveo analysis of Aviation Week forecast data shows. That’s about the same percentage as the next two platforms, the Rolls-Royce Trent and GE90, combined, and three times more than the V2500.

And it won’t stop anytime soon. In fact, the CFM56’s imminent shop visit peak, pegged at 2,000-2,500 heavy overhauls per year and long forecasted for the mid-2020s, is morphing into a multi-year event.

“We do expect that shop visits will probably plateau at that 2025 level for maybe another couple of years and then start declining,” GE Aerospace CFO Rahul Ghai shared on the company’s recent earnings call. “We are seeing that the platform is getting used, and the shop visits will be higher for an extended period of time. And we will see third shop visits.”

Some of this stems from growing demand for lift. Traffic as measured in revenue passenger kilometers was up 14.5% in the first five months of the year on a 12.4% increase in capacity, or available seat kilometers, IATA’s latest figures show.

Mix in the issues getting new aircraft into the fleet—some for growth, some for replacement—and old, reliable equipment remains firmly entrenched in many airline fleet plans.

“We’ve seen a surge in demand for CFM56 engines,” said Rudy Bryce, president and CEO of CFM Materials. “In fact, demand for CFM56-5B engines for the A320ceo family has recently increased to the level we’ve been seeing for CFM56-7B engines for the 737NG family.”

The 737 MAX’s 20-month grounding that ended in late 2020 and prolonged production-rate slowdown has placed steady pressure on the 737NG fleet for five years. On the Airbus side, the steady stream of grounded PW1000G geared turbofan-powered airframes expected to last through at least 2026 means the closest alternatives—namely A320ceos with either CFM56s or V2500s—are not about to lose any popularity.

A prolonged shop-visit plateau means more juggling for CFM, the 50/50 GE Aerospace-Safran joint venture. Leap MRO needs are steadily rising, so resources must be allocated accordingly.

Innovative independent providers will help meet aftermarket demand as well. A shortage of spare parts—both new and used—is driving remand for repairs, for instance.

Then there are options like FTAI Aviation’s module-swap program in which the company acquires engines and parts and builds full modules—some of which feed overhaul demand in its own shops.

Instead of a traditional teardown and rebuild being held up by or two missing spares, customers can opt to swap.

“I just did a [low-pressure turbine] swap in two weeks,” FTAI CEO Joseph Adams said on a recent earnings call. “That engine would have been in the shop for six months if I hadn’t done that.”