Podcast: Unpacking Undocumented Parts

Aviation Week’s James Pozzi, Sean Broderick and Dan Williams assess the recent uncovering of forged airworthiness documentation for aircraft parts sourced from a UK-based broker.

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Rush Transcript

James Pozzi:

Hi, and welcome to the MRO Podcast. I'm James Pozzi, MRO Editor for the EMEA regions. And today we are going to discuss a story, and a pretty alarming one at that, obviously first broken by Bloomberg last week, but obviously since reported by Aviation Week relating to forged airworthiness documentation for aircraft parts that's sourcing from a UK-based parts broker, AOG Technics. These were related to the CFM56 engines and on a much smaller scale, CF6 engines too. It's worth mentioning that AOG Technics have no affiliation to any engine OEM. They are an independent parts vendor. We will be looking at how this could impact the legacy engine market and what actions OEMs and regulators may take next. And also, I guess, just getting a summary of what the whole picture is in this and it's fair to say a bit of a mess.

So joining me today to discuss this topic and it's fair to say backed by popular demand as well, are my colleagues, Sean Broderick, who is Senior Air Transport and Safety Editor at Aviation Week. And Sean recently has done some very detailed reporting on the follow-ups to this breaking story and developing story, it's fair to say. And joining in of course is Dan Williams, who is Senior Manager of Fleet, Flight and Forecast Data at Aviation Week. Gents, it's great to have you back on the MRO Podcast today. Welcome.

Sean Broderick:

Great to be back.

Dan Williams:

Yeah, third time's a charm. Thanks for inviting me back.

James Pozzi:

No problem. Great to have you. Sean, just starting with yourself then, it'd be good then to get a bit of background to this story. Perhaps going back to around one month ago when I think CFM first issued their first bulletin related to this issue. If you could summarize what has occurred since then, that would be a great start. Thanks.

Sean Broderick:

Sure. And as you noted, I mean this first came to really the general public's attention, I guess with Bloomberg's very well reported story. And they since followed up with a few. But for the industry or at least for those affected by it, it first came to light in late July when CFMs send out a bulletin to operators and MRO shops and other folks they believed needed to know explaining that they had an issue with some parts that were sold to an MRO shop with falsified airworthiness approval tags. And we'll talk a little bit more about what that means in a minute.

But to move forward, so once CFM, and as you said, GE, which has found two instances, two different parts with falsified US FAA airworthiness approval tags, which are known in the industry as 8130-3s, named after the form that the tag is, GE, Safran and their combined entity, CFM, notified the regulators. And in early August, EASA and the UK CAA issued supplement suspected unapproved parts notices, putting industry on notice that they should look at any parts bought from AOG Technics or that's passed through AOG Technics and validate their airworthiness approval tags and other documentation.

So Bloomberg summarized that and did some digging on AOG Technics, which seems to be a shadow of a parts broker, to put it mildly. We have found as of today, or at least as of yesterday, 50 parts, about 48, I believe I have this right, CFM56 parts and two CF6 parts that have falsified either EASA Form 1s or FAA 8130-3s. Now these are just pieces of paper with information filled out on them. There's really

nothing special about them other than the fact that they have authorized signatures from the production approval holder. In this case it would've been CFM or GE or Safran, depending on where the part was allegedly sourced from. And they get shipped along with some other shipments, documentations with the part and it ends up at the MRO shop or the airline.

As far as I know, there are no restrictions put on by the OEMs of who can buy their parts. They won't sell them to just anybody, but they won't put limits on what you do with those parts once you buy them. So if you're an MRO shop and you get a part from a broker that has the airworthiness approval documentation that's sourced from an OEM, that's not necessarily a red flag. There's nothing really on the form that's going to throw up a red flag. It really comes down to how much you know about where you're buying the part from.

And in this case, now we don't know, we believe that it's all documentation related. AOG Technics is not fabricating fake parts. They are simply trying to pass off parts that don't have the proper airworthiness documentation. That means by definition they're unairworthy. Does it mean they're unsafe? Technically, yes, because they don't have the airworthiness documentation. But does it mean that an airplane with that part's going to fall out of the sky? Not necessarily. As you said, it's not a good thing. I mean, it's a little alarming how easy this can be if you don't as a parts buyer know who you're getting the parts from. The lack of proper documentation may not be easy to spot. The most interesting thing about this I think is going to be learning who bought the parts and what sort of checks and balances they have on their end. And that may dictate what, if anything, regulators or more likely legislators will do to try to stop this.

Now, again, have to emphasize there are not a lot of these instances in the industry, at least not in the commercial airline industry. There are plenty of subs notices out there on EASA's website and FAA's website. FAA has yet to put out anything on this, by the way. So it's not that this never happens, but it's not permeating the entire narrowbody fleet either, at least not so far. We don't think AOG Technics has gotten that far with this. And Dan, I think, is going to talk a little bit about why this is sort of an interesting time to be doing this.

But anyway, so that's where we are now. Bloomberg came out recently with a very good story digging more into AOG Technics. It appears as though they may have falsified employees, made up people with fake experience using headshots that they completely made up. So it appears as though they had quite a little racket going. Hopefully it's less than 50 parts, less than 70 fake documents. Some of the parts had multiple documents. Hopefully that's it. It seems as though that after an initial discovery of 30 parts in that first little bit when CFM put out their first notice and then another 20 parts within the last month or so, it seems as though hopefully the momentum is slowing down and the regulators have a handle on this.

James Pozzi:

Yeah, interesting. I mean it's, as you said, not a common scenario, but certainly an unwelcome one. I guess it's a safety and a reputational nightmare for everyone involved, even those of course, who are not directly at fault. A big mess is, I think the untechnical way I'd describe it. And it's interesting about AOG as well, AOG Technics, well, they still had an active website when this story broke, but that's no longer the case. And their LinkedIn profile seems to have gone as well, I noticed when I was doing my pre podcast research. So just a quite shadowy company there it looks like.

So just before we move on to Dan, Sean, just to get a picture of what you think will from the OEM perspective, engine manufacturers, of course the ones mentioned, CFM and GE as well, and obviously Safran have had some involvement in terms of identifying these parts as well. What do you think the next actions will be from engine manufacturers? Maybe also taken into account ones that maybe aren't

involved yet, but have been mentioned, maybe looking at things like Pratt & Whitney? What would be the next course of action for those kind of engine OEMs?

Sean Broderick:

Well, they will seize upon this to underscore the value of dealing with them directly. Now, the subs notice, or I'm sorry, the CFMs' original notice said that at least some of these parts at the beginning were passed off as new parts. So if you're buying new parts, you can obviously get them through brokers or distributors. There are authorized distributors, and then there are other sources, and then there's direct from the OEM. And OEM is going to look at this and say, "Look, you want to be absolutely sure the part you're getting is from us. Then you buy it from us." On the used materials side, of course, nobody does more used materials business than GE. They pump a lot of that into their own shops and they sell a lot of it to their customers. So any of these OEMs are going to say, "Look, you want to guarantee the part is right. You buy it directly from us."

Now there's a whole group, the parts broker business gets a bad rap because for every AOG Technics, there are hundreds of ones that are legitimate. The unfortunate part of this is that those hundreds that do quality work and that are actual active members of the industry, they join associations and they try to make themselves look as legitimate as possible. There's no certification for them. There's nothing like that in the industry that there's nothing you have to do like obtain a license like you do to be a pilot for an A&P. You don't have to do that to sell parts. It would be a shame if we had to go down that road because of a few bad apples. But if you're the OEM, you're going to say, "You want to be sure that you're buying parts, buy it from us."

I think really the action's on the other end. If you're buying parts, even in a tight market like this where we all know CFM56 parts and V2500 parts are in high demand because you have delivery problems with the new airplanes that are supposed to replace them. Traffic demand is booming. So AOG Technics, they did two things right. They picked a great name and they picked great platforms to do this on. Those are the two things they did right. Everything else they're doing horribly wrong and seemingly on purpose. But if you're a buyer of the parts, you've got to know who you're dealing with. And if you don't, then you've got to validate the airworthiness approval tags by making phone calls and matching up the information that is on those tags, on those forms with the OEMs. They keep track of it, they know what they shipped. Anybody that sells a part that has authorized signature on an 8130 or a Form 1, they're going to know if they sold it or not. You call them, you make sure it started with them.

James Pozzi:

Okay. Dan, it'd be interesting to get your perspective maybe from the data angle and maybe give us a picture of the demand for some of these parts related to some of these legacy engines, obviously CFM56 and the CF6. Maybe demand for these legacy platforms link to demand and delivery delays. What are some of the numbers or facts you can tell us around that?

Dan Williams:

Yeah, Sean makes a great point. When it comes to AOG, they picked a great platform. I'll focus in predominantly on the CFM56 because it's such an important engine across the globe. We have seen that even pre-pandemic, the wane as it were of the wide body fleet and pivoting to narrowbodies in terms of longer range, longer led narrowbodies. However, the problem we're in at the moment is because of other engine issues, and we've talked about them on these podcasts of new engine issues ultimately, it means the operators who want to have aircraft are pushing aircraft on longer. So what's happening is the CFM56 is predominantly the -5 and the -7. Now, to those of you who are not quite as nuanced as

some others, that ultimately is the 737 next-gen family and the classic A320s, let's say. I've still not settled on a name to call them because the neos is the New Engine Option, is the current engine option as well. So I still don't get Airbus' naming, but I digress.

As we sit today, I did some checking in our fleet discovery product. There's about over 10,000 aircraft in service today that are powered by CFM56-5s, -7s, and there's a little over another 500 that are in storage. So as you can imagine, generally most of these are twin engined aircraft. There's a few A340s that have the CFM56 on, but predominantly they're two engined aircraft. So that's a lot of engines, that's a lot of parts, and that's a lot of demand. A little insider to our upcoming 2024 forecast, we're forecasting still there to be over 7,000 CFM56-5, -7 aircraft in service at the end of our 10-year forecast period in 2033. So that's a little insider here because literally we are in the throes of doing our forecast right now.

And to add even more to that, when you look at the utilization of these aircraft, you go back to 2019, and 2019 is a good year to use as an example, because the MAX wasn't particularly impacting the CFM56 engine utilization because of the tragic accidents and ultimately the grounding of the MAX in March 2019. The CFM56-5, -7 accumulated 32.5 million hours of utilization. And roughly for these aircraft, it's a 2:1 in terms of hours and flights. So it's 16 million flights. So that just goes to show that whenever anybody wants to go away or anybody wants to do business and you're doing it in relatively short haul, chances are you're going to be flying on a CFM56. Still to this day, the CFM56 still outnumbers the Leap and the GTF. So that's why it's so important is because depending on how far this has gone through the system, and to Sean's point, again, we don't know if these are genuine parts and ultimately it's an issue with documentation.

We don't know if they're creating strange parts, we don't know if they're safe. The problem is we don't know. And I think that's the biggest question is we don't know how far this has gone down. So it raises such a big impact because still get these delays on these new aircraft still coming in and they're slowly getting there. But obviously, we were on this podcast a couple of weeks ago talking about GTS issues, the Leap is still not 100% perfect either, and that is not unusual for a new platform to have teething issues. However, they're going on a little bit longer. And when you compare it to when the CFM56 first came into the fleet, that had teething issues as well, however, we were flying very differently 30 years ago than we are today with the new teething issues of the GTF and the Leap. So I think that's the crux of this problem is we just don't know how far it goes and how far it could impact.

James Pozzi:

Yeah. And just finally, just some final thoughts and maybe going back to you, Dan, about the impact on the legacy engines. Obviously from an industry point of view, we'd hope it's not widespread and it doesn't seem like that would be the case, but is it sort of a case of we can't really tell yet about, I guess the long-term impact on the legacy engine platforms? That's too difficult to cipher at this point, right?

Dan Williams:

It is difficult because, as I say, until everything's been uncovered of where AOG have delivered parts to what those parts are, are they critical parts, all these little aspects that come to it with the pressure being applied to keep, especially over the past few months in the Northern Hemisphere's summer schedule is some of the busiest time of the year. The pressure comes off a little bit starting from roundabout now because we start not transitioning to the winter schedule yet because we're still a few weeks away from that.

However, we are at that traditional time of year where operators start getting their aircraft either in for maintenance or start deciding, look, is this aircraft going to be retired from service because we no longer require it. So we're at a point where there is a little bit of leeway or give within the system. However, it doesn't take long before we're back at the start of the next summer schedule in the Northern Hemisphere or we're entering the summer schedule in the Southern Hemisphere, so some of the problems are going to be uncovered for the Southern Hemisphere in the coming weeks.

James Pozzi:

Thank you. And, Sean, yes, similarly, closing thoughts please.

Sean Broderick:

We don't know exactly what parts have been affected here. What we do know though, we do know a few things. No life limited parts so far. There's about 20 of those. I think there's 18 of them on the CFM56-7. None of them are life limited parts. And we also know that Pratt & Whitney proactively put out a note because AOG Technics, when it had a website, marketed PW, I think 4,000 parts, and I think maybe some V2500 parts. Pratt put out a notice saying, "Hey, want to put everybody in alert." No reports so far that any Pratt parts have been uncovered with falsified documents.

I mean, we don't know if AOG Technics was selling some parts legitimately, some not. We just don't know a whole lot. And if there's any good news, so far it's only 50 parts. Now 50 parts is still not something to just completely dismiss, but it doesn't seem as though that AOG Technics had a pipeline into the narrowbody fleet and then were risking imminent groundings. It certainly does not appear that way right now. Nothing has been uncovered that's causing, the way I put it in my latest story, concerns that hazard is going to escalate to risk with the operating fleet at least so far.

James Pozzi:

I think the biggest issue right now, the biggest headache right now is people having to go through paperwork of where they purchased their parts from and see if they've got any parts from AOG.

Sean Broderick:

Right. And that's going to take time. But again, we've been reading about this for a week and a half, industry's been working on it for five or six weeks. And if it redoubles efforts to make sure you have strong relationships with the vast majority of parts sellers and brokers and distributors out there that are legitimate businesses and your tightening relationships with your PMA providers as well, then this may come out, there may be some silver lining in this whole mess when it's all settled.

James Pozzi:

Absolutely. I know Dan is as well, but I'm attending Aero-Engines Europe in Madrid next week, so it'd be interesting if any topic of conversation comes up on this issue and see what the people in the engine segment have to say about it. Certainly something that I imagine we'll do. So yeah, we'll wait and see. But yeah, Sean and Dan, thank you so much again for joining us and giving us those valuable insights on this developing issue. Don't miss the next episode by subscribing to the MRO Podcast wherever you listen to your podcasts. And one last request, if you're listening in Apple Podcasts and want to support this podcast, please leave us a star rating or write a review. Thanks.

Sean Broderick

Senior Air Transport & Safety Editor Sean Broderick covers aviation safety, MRO, and the airline business from Aviation Week Network's Washington, D.C. office.

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.

Daniel Williams

Based in the UK, Daniel is the Manager of Fleet, Flight and Forecast data for Aviation Week Network. Prior to joining Aviation Week in 2017, Daniel held a number of industry positions analyzing fleet data.