Why airlines like American Airlines are striving to increase the lifetime of their engines

TULSA, Okla. — Parts and labor shortages. Delayed deliveries of latest aircraft from Boeing and Airbus. An engine recall. Premature repairs. Everything is piling up and engine workshops world wide are overcrowded.

While more travelers than ever before boarded planes this summer, airline managers waited impatiently for his or her engines to be repaired and overhauled.

Engine repair and overhaul has grown from a $31 billion business before the pandemic to $58 billion this yr, based on Alton Aviation Consultancy. It is a money cow for engine manufacturers reminiscent of GE Aerospace and the a whole bunch of smaller specialists who manufacture GE engines and other Pratt & Whitney and Rolls Royce.

American AirlinesThe solution is to do more work yourself.

“We have only one customer, and that is American Airlines, which does our work for us,” said David Seymour, chief operating officer of American Airlines. “We can control our own destiny in this area.”

At its busy engine shop on the airline's 300,000-square-foot maintenance facility at Tulsa International Airport, the biggest of its kind on the planet, American is heading in the right direction to extend its overhauls by about 60% starting in 2023, to greater than 16 engines a month this yr, up from five a month in 2022. It has added about 200 recent jobs there, in addition to more equipment reminiscent of cranes to hold the 2-ton engines during overhauls.

At the center of the work are CFM56 engines, manufactured by a three way partnership between GE and France's Safran, which power American's older Boeing 737 workplanes and plenty of Airbus A320s. These narrow-body aircraft make up the majority of American's core fleet of greater than 960 aircraft, based on an annual company securities filing.

“I can overhaul these engines and get them through the workshop in lower than 60 days, unlike [outside] Business today [are] 120 to 150 days, in some cases over 200 days,” said COO Seymour.

The engine repair bottleneck is due in large part to the industry's rocky recovery after the pandemic, when companies had to lay off thousands of skilled workers. Airlines that delayed maintenance during the travel downturn then tried to get their planes back in flying condition when demand picked up, but faced shortages and failures in key parts from engine components to aircraft seats.

Meanwhile, Airbus and Boeing are falling behind on deliveries of new, more fuel-efficient aircraft, forcing airlines like American to keep older planes longer than planned.

Airbus this summer cut its aircraft delivery forecast and announced cost cuts as the company struggles with supply chain problems and delayed landing gear and engines.

“I would also call it the surprise factor for 2024,” said Airbus CFO Thomas Toepfer during a conference call on quarterly results on July 30.

In addition to supply chain issues, Boeing has also faced delays in aircraft deliveries as the company grapples with a safety crisis after a door panel blew out mid-air on one of its 737 Max planes earlier this year.

Because many engines need to be overhauled every 7,000 flights or so, keeping older aircraft in service longer means more routine maintenance and refits, increasing demand when they do need to go into the shop. These week-long overhauls are exhausting: They can cost $5 million apiece, and can cost twice as much for wide-body aircraft, says Kevin Michaels, managing director at AeroDynamic Advisory.

At American's Tulsa shop, workers remove hundreds of parts, replace components with limited lifespans and clean and inspect others, including spraying them with a fluorescent penetrant to make defects visible under black light.

But critical parts are hard to find and must be in perfect condition. They're also expensive. Dozens of engine compressor blades can cost $30,000 a piece.

In addition, some newer engines – which run hotter, take in more air and burn less fuel than older types – are entering engine shops sooner than expected, frustrating airline CEOs.

“No company can forgive itself for not using its core assets to generate revenue,” says Martin Gauss, CEO of Air Baltic.

The Riga, Latvia-based airline, which is an Airbus A220 customer, has had to lease aircraft in recent years to replace the number of grounded jets.

“Unfortunately, passengers aren’t completely happy when they can’t fly on recent aircraft,” he said. “This is an issue that can someday be over. We thought it could be over by now. I’d wait one other two years after which we'll be through.”

There is another problem clogging up engine workshops: a recall of some Pratt & Whitney engines for narrow-body aircraft. In light of the ongoing problems, some low-cost airlines, including JetBlue Airways And Spirit Airlinesare postponing the delivery of new jets to save money.

“This is a type of vicious brew that has had a major impact on the engine supply chain,” said Michaels of AeroDynamic Advisory.

The high demand for engine overhauls is lucrative for engine suppliers, who earn billions from servicing the engines they sell on new aircraft.

GE Aerospace generated $11.7 billion from engine maintenance, repair and overhaul in the first half of 2024, accounting for 65% of its revenue.

“With engines, it's a razor blade business,” Michaels said, describing how razors you buy at the drugstore can buy replacement blades for years. “So the cash is made within the parts business.”

GE Aerospace, which became an independent company in April, announced in July that it 1 billion US dollars to modernise its engine workshops worldwide over the subsequent five years.

For many airlines, there are few alternatives to expensive engine overhauls as demand for replacement engines increases – especially if the airline only has one aircraft type or model that can only be obtained from one supplier.

Lease prices for engines that fit both old and new aircraft have skyrocketed. For example, according to aviation data firm IBA, a CFM56 engine for the Boeing 737-800 cost $96,000 a month, up from $78,000 in 2017.

According to IBA, leasing rates for the Pratt & Whitney and CFM engines that power the newer Airbus A320neo aircraft are now $127,000 per month. In 2017, they were $80,000 and $85,000 respectively.

Due to high demand, leasing companies such as AerCap and Avolon have purchased replacement engines.

However, it is still difficult to get to an engine repair shop.

Delta Air Lineslike American, overhauls, repairs and maintains its engines itself. It also works for other airlines, but CEO Ed Bastian says the shop is full.

“If you don't have an existing contract, you're not getting in,” he said in an interview in July. “It can be easier to get right into a Taylor Swift concert.”