Launched in 2022 by two experienced MRO and aviation parts trading professionals, Danish components specialist Corax has been quickly ramping up its business. This year, Corax has so far acquired seven airframes and opened a sales office in Singapore. On the sidelines of MRO Europe in Barcelona, Corax President Morten Espenhein spoke with Aviation Week Network about the company’s parts strategies and his perspectives on industry challenges and trends.
What parts sourcing strategies does Corax use and what types of parts are you targeting right now?
Our main focus right now is to acquire airframes, send them in for teardown and build up inventory because the market for used serviceable material (USM) is hot. Next year, we hope to acquire 4-6 airframes, and in 2026, up to 10 airframes. There’s just as much work in acquiring an airframe as if you go out and buy a smaller package, so in that way, the most reliable source is to acquire straight from the source—the leasing companies. When you buy an entire airframe, you get a lot of parts and hopefully also at the right price, so our main focus is end-of-life airframes from leasing companies. But if there is a package out there, of course we’re going to look for that as well.
Today we have Airbus A330s and some A321s. Our focus for next year is going to be adding Boeing aircraft and potentially also some regional aircraft. Being a new company, we’re still trying to figure out what our exact mission is going to be. It’s a big market. If you have the parts on the shelf then you can start building relationships with the airlines, so you need a wide inventory.
We’ve seen a lot of independent parts players pop up in the past few years. What do you think is driving this?
I think what is driving it is this boost to the market is in recent years. There’s too much money in the market, so of course everybody’s looking to get a foot in the door. A lot of people have actually benefited from the bounce back after COVID-19; they have been able to acquire very cheap assets during and after COVID.
What are the biggest challenges you’re seeing in the parts market?
The challenging part in the aftermarket when you acquire airframes is that most times when an aircraft is retired, the leasing company that owns the aircraft flies it into teardown facilities or graveyards, but due to demand in the engine market, leasing companies in nine out of 10 cases will take engines off and use them on some of their other aircraft. When you acquire an aircraft, you always acquire the engines as well, and then you’re going to be stuck with the headache of how you are actually going to disassemble it. As much as you would like to choose where you tear down the aircraft, where the aircraft is based is going to determine who will actually perform the teardown. In that sense, our seven aircraft are at seven different sites with seven different teardown providers. That’s quite a challenge.
We’re still seeing the consequences of COVID-19 with supply chain issues. It has become much better, but there are still delays, and we expect that for at least the next 2-3 years it’s still going to be hard to get parts and material. We have also seen this year that the prices on airframes keep going up. For example, two years ago you could pick up an A320 for less than a million. Now, you see prices close to or even above $3 million, and just in the last 12 months prices keep going up. Is that a healthy situation or not? Time will tell, because it cannot keep going up. So, it is also about being careful when you acquire to ensure you get it at the right price.
Various players in the parts market have started introducing new technology platforms for parts acquisition and trading. What is your take on utilizing software or technology to drive efficiencies?
Data is very important. The more data you have, the faster you can make a good decision. But what actually makes the USM market special compared to a lot of other businesses is that, at the end of the day, you cannot use artificial intelligence (AI) to determine if it’s good or not. It all comes down to actually knowing what you’re doing. You need to know the product all the way down to the single part number level. Over the past couple of years, we have seen companies that tend to rely too much on AI that forget how the company was actually built, and they’re going to start suffering because aviation is a special market. You need to know what you’re doing to be able to make the right decision.
Beyond acquiring more and new types of airframes, what is on Corax’s road map for 2025?
We’re looking to break into the U.S. so we can operate in the biggest market. We are a new company, so we are looking to get our foundation right. I would actually say that the biggest buzzword in aviation is compliance. There is a lot of clean-up in the market right now and compliance is getting more and more important. At the end of January, we’re going to be both ASA-100 [quality system standard for civil aircraft parts distributors] and AS9120 [quality management systems for stockist distributors] approved, which is a very important thing to the customers.