FTAI Aviation has highlighted Southeast Asia as a target region to expand its module exchange business for CFM56 and IAE V2500 engines.
“We started it about six, nine months ago really with a more intense focus on Southeast Asia,” said FTAI Aviation’s chief operating officer, David Moreno, on a recent earnings call. “It’s a huge, huge market opportunity that we were relatively underrepresented [in] but that will be changing this year, and we see that as a future significant growth opportunity. Whether we add maintenance capacity there or not is something we’ve started thinking about.”
The company is also bullish about the expansion of its V2500 aftermarket business, having already achieved significant scale on the CFM56 engine platform.
Moreno notes that full V2500 overhauls are more expensive and complicated than those for the CFM56, which creates demand for alternatives like module exchanges.
Chief executive Joe Adams also notes that the huge number of the Pratt & Whitney GTF engines on the ground has turbocharged demand for the V2500, which was the engine that many GTF operators were transitioning out of before powder metal problems grounded the newer engine.
He expects that dynamic to remain in place for the next three years, boosting demand for both module exchanges and leases of V2500 engines.
“If we can do the MRE [maintained repair & exchange], put it on a long-term lease, then you can sell it as a cash-flowing asset and create value two different ways," he adds.
Aerospace product sales, which covers FTAI’s used serviceable material and module business, rose to $189 million in the first three months of 2024, up from $85 million a year earlier.
The company performed 72 module exchanges in the quarter and is confident it will hit its target of 250-300 exchanges for the full year--and of further growth thereafter.
“We have ample capacity at our two maintenance facilities that we use" in Montreal and in Miami, said Adams. “Obviously we’re working to increase capacity and ramp up because we want to stay ahead of this and we do see substantial upside in the years ahead. So we’re building additional capacity but we have in place what we need to deliver this year,” he added.
