Archives: insights

As of the end of October 2020, approximately 540 air transport aircraft had been officially retired and withdrawn from use. That’s ~2.6% of the active fleet. These include ~100 A320ceos, 63 747-400s, 54 MD80s, 40 MD90s, 38 737NGs, 26 A330s and 25 777s. ~51% were narrowbodies, 40% widebodies, and 9% were regional jets and turboprops.

In terms of the average age of aircraft retiring so far this year, it’s been 23.7 years for narrowbodies and 22.2 years for widebodies. There were ~60 aircraft that were under 15 years of age (including A340-600s, E-Jets, A380s, A320ceo family, and 737NGs).

When aircraft are retired, most of the residual value is in the engines since some of the engines may have greentime remaining and/or USM that can be reclaimed for use in future engine shop visits. Given the aircraft models, ~195 CFM56-5B/7B engines, 82 V2500-A5s, 16 GE90s, 30 Trent 700s, and 22 Trent 800s were retired.

There are many more aircraft currently stored (~13,000), and we expect some of these won’t return to the sky given the traffic outlook. Airlines and lessors are playing wait-and-see before deciding to turn stored/parked aircraft into retired aircraft that won’t fly again. Hence, the official retirements so far are still in the hundreds and not thousands.

Maintenance is ~10% of airline operating costs, and airlines are in cost-conservation mode.

Airlines have several options to reduce MRO spend. Whether to perform the MRO or not may depend upon MRO type and MRO alternatives (e.g., leasing in an engine or part, burning greentime, USM, etc.).

They may have options regarding material to use, which may avoid new parts (critical to OEM profits).

Options depend upon airline and, if relevant, lessor policies. Also, there may not be any alternatives to the OEM part. The point is, however, that they may well have options.

It’s also vital to consider if the MRO is a relatively high cost (e.g., engine shop visit)? The higher the cost, the more likely for deferral or alternatives. Is the maintenance discretionary (e.g., cabin upgrade) that could be deferred? Is the aircraft owned or leased? What requirements does that place upon the operator (and is an end-of-lease check due)?

It’s worth considering the type of MRO contract that the airline has with its supplier. If they have paid by the hour, the operator may send the engine or component for overhaul/repair.

Finally, does the airline have the in-house capability, or is the MRO outsourced? That may also impact whether they perform the maintenance or delay it.