Heavy shop visits for CFM International’s workhorse CFM56 engines are on track to peak as early as 2025, helping push already lucrative aftermarket revenues for GE Aerospace and Safran even higher and spawn creative approaches to keeping the engines in service.
Safran is projecting a 20% rise in civil engine aftermarket revenue this year compared to 2023, the company said on a recent earnings call. Much of this will be driven by spare parts revenue growth. Price increases will help some, but shop visit figures are increasing as well.
“We are approaching the peak,” Safran CEO Olivier Andries said on the late February earnings call. “We still expect a growth that I would quantify as a mid- to high-single-digit ... on the number of visits in 2024 versus 2023. We expect the peak to occur probably in 2025, so still growth on the volume.”
On spares, Andries said that a pending August price increase is likely to help boost revenues in the second half of 2024. CFM, a 50-50 Safran/GE Aerospace joint venture, has been boosting prices 3-4% above inflation.
Full overhauls of CFM56s have been on pace to peak in the mid-2020s for years, driven by steady utilization and last decade’s deliveries of Boeing 737 Next Generation aircraft, all powered by CFM56-7Bs, and Airbus A320ceos equipped with CFM56-5Bs, one of two engine options. The shop visit figure is expected to top out at just above 2,000 heavy overhauls per year, though so-called “hospital” and other smaller-workscope overhauls will continue to rise.
Recent developments, notably surging demand for narrowbody capacity and delays affecting deliveries of current-generation aircraft, have placed more of a premium on CFM56 availability. Engines with any available green time are flying until they need overhauls, while lessors are getting higher prices for any usable engines they have on hand.
The demand means some engines once earmarked for dismantling and generating used serviceable materials (USM) feedstock are being overhauled. This helps operators meet their needs but forces second-hand parts suppliers to scramble.
“The supply of engines throughout the last 12 months has gone down significantly,” said Jason Alvarez, director of operations for PTS Aviation, Standard Aero’s USM business unit. “We were very fortunate last year. We had a great year with a lot of good acquisitions.”
Market dynamics have changed the landscape. “It’s a little bit more challenging” in 2024, Alvarez told attendees at the recent Aviation Week AeroEngines Americas conference. “There’s not a lot of availability. So, we have to get creative in our approach.”
Among PTS’s strategies are module-exchange incentives that yield some valuable parts. Alvarez pointed to used high pressure turbine (HPT) blades as a particularly coveted item.
“Before, nobody had mid-life [life-limited parts], so it was expected that you would have to buy new,” he said. “But you were able to find at least some USM in the HPT blades market.”
Alvarez expects to see more creativity in the CFM56 maintenance market as heavy overhaul volume reaches its peak.
RBC Capital Markets analyst Ken Herbet agrees. He expects engine manufacturers, which need their mid-life engines to help ease the capacity crunch as they work through issues on current-generation programs, to be heavily involved.
“I think you’re going see a lot more options in the marketplace,” Herbert said at AeroEngines Americas. “You’re going to see a lot more interest from the OEMs and ensuring the service levels are going to be up there and turnaround times on those engines don’t take a step back.”
Herbert said he expects the OEM efforts to extend into spare part availability, including USM. “There’s a lot happening to address some of the pressure on those legacy engines,” he said.
