MRO Memo: What To Expect At Engine Leasing, Trading & Finance

Signs of optimism are emerging following a challenging two years for the engine leasing segment.

Next week Aviation Week is holding its Engine Leasing, Trading and Finance conference in London. The event, which runs June 7-8, is sure to provide a good reading of the segment’s overall health and how it will look to further rebound following the challenges of the past two years.

Last year’s event saw an industry starting to look forward again, having weathered the worst impacts of the COVID-19 pandemic, although it still faced a multitude of challenges. The consensus suggested that the engine sector of the leasing market was expected to recover at a slower rate than its airframe leasing counterpart.

Following a tumultuous 2020 that continued into a challenging 2021, airlines were actively still looking to renegotiate leases with lessors while also tapping into the green-time engine segment. However, carriers looking for assets were doing so from a position of strength in summer 2021. 

From the lessors’ perspective, more short-term leases were expected over the 12-18 months following the June 2021 event. It was viewed as more advantageous for carriers to lease engines, particularly mature models, rather than spend money on shop visits for owned assets.

Questions remained about whether investor confidence will rebound in the long-term. For any recovery to take place, a pickup in air travel was deemed necessary which, in turn, would result in investor confidence returning. 

One year on and with COVID-19 restrictions being further lifted in many parts of the world, a renewed sense of optimism is expected. Passenger numbers are expected to grow this summer, and that will naturally aid growth in asset demand and MRO spend while also helping to raise investor confidence. 

However, questions still exist around when a real pickup in shop visits will occur, how workforce and supply chain challenges are impacting engine leasing, and what the expectations are for retirements that will help with the supply of assets to the market from additional parts to spare engines.

Geopolitical factors, such as war in Ukraine and ongoing restrictions in China, are also expected to be recurring topics over the two days.

As ever, Aviation Week will cover all of the discussion points.

James Pozzi

As Aviation Week's MRO Editor EMEA, James Pozzi covers the latest industry news from the European region and beyond. He also writes in-depth features on the commercial aftermarket for Inside MRO.