CFM56 Holds Firm

737 CFM56-7B engine on tarmac
Green-time lease requests for engines such as the CFM56 have been in high demand during the past 18 months.
Credit: Sean Broderick/AWST

As airlines return capacity to the market, especially on short- to medium-haul routes, one of the first beneficiaries will be the CFM56 aftermarket for maintenance, spares and leasing. 

After seeing an overall reduction in shop visits last year, Safran chief executive Olivier Andries stated in a March 2021 earnings call that the OEM anticipated an increase of around 15% in shop visits in 2021.

He also noted the popularity of green-time engines during the period. 

“Green-time leases have been in high demand from APOC during the pandemic,” confirms Anca Mihalache, vice-president of engine trading at APOC Aviation, in an interview with Engine Yearbook 2022.

“We have seen this before during previous crises that have affected the aviation sector, but now, even the agreements for green-time leases have changed. The discussions are currently focused around the PBH [power by the hour] rate, the possibility of rent holidays, and the return conditions and timing of the engine.”

Mihalache also observes that CFM56 values and lease rates have proved resilient through the crisis

“I would not say that lease rates have changed significantly, but some rent holidays were offered by lessors to operators, and they were happy with this short-term assistance,” she says. “Other engines have been returned to lessors and many are being stored waiting to be leased again.

Whenever possible lessors would rather keep the engines until the market recovers, rather than lease them with a high discount. As a consequence, the monthly rent for this engine type has not changed significantly,” she adds.

For in-depth analysis of how the CFM56 aftermarket will develop as the airline industry emerges from the Covid-19 crisis, see the forthcoming Engine Yearbook 2022.

Alex Derber

Alex Derber, a UK-based aviation journalist, is editor of the Engine Yearbook and a contributor to Aviation Week and Inside MRO.