The demand for aircraft engine repairs and overhauls has surged in recent years due to parts and labor shortages, delayed deliveries of new airplanes, and engine recalls. This has resulted in a backlog of work for engine shops worldwide. According to Alton Aviation Consultancy, the repair and overhaul of engines has grown from a $31 billion industry before the pandemic to $58 billion this year.
American Airlines has taken a unique approach to address this issue by expanding its engine shop in Tulsa, Oklahoma. The airline is on track to increase its overhauls by 60% this year, performing more than 16 engine overhauls per month. By doing the work in-house, American Airlines can have engines overhauled and through the shop in less than 60 days, compared to the 120 to 150 days it takes for outside shops.
The bottleneck in engine repairs can be attributed to the industry’s rocky recovery from the pandemic. Many companies had to lay off skilled workers, and airlines that delayed maintenance during the travel slump faced worker and experience shortages. Additionally, Airbus and Boeing are behind on delivering new planes, forcing airlines to keep older aircraft in service longer than planned.
Keeping older airplanes longer means more routine maintenance and overhauls, further adding to the demand for engine repairs. These overhauls can cost up to $5 million each and even more for wide-body airplanes. Furthermore, the industry is facing challenges in finding key parts, which are not only hard to find but also costly. For example, engine compressor blades can go for $30,000 each.
The situation is further complicated by the early arrival of newer engines, which are more fuel-efficient but require maintenance earlier than expected. This has frustrated airline CEOs who are unable to generate revenue from these assets. Additionally, a Pratt & Whitney engine recall has caused some low-cost airlines to defer new jet deliveries to save money.
Despite these challenges, engine suppliers are benefiting from the high demand for overhauls. GE Aerospace, for instance, earned $11.7 billion in revenue from engine maintenance, repairs, and overhauls in the first half of 2024, accounting for 65% of its revenue. The aftermarket engine business is highly profitable for engine makers.
For many airlines, costly engine overhauls are the only option due to the limited availability of replacement engines. Rental rates for engines have skyrocketed, making it more expensive for airlines to lease spare engines. Leasing firms have been acquiring spare engines to meet the high demand. However, it remains difficult to secure a slot in an engine shop, as they are already full with existing contracts.
In conclusion, the surge in demand for aircraft engine repairs and overhauls has created challenges for the industry. Airlines like American Airlines are expanding their in-house engine shops to address the backlog of work. The industry is facing shortages of skilled workers, key parts, and new airplanes. Despite these challenges, engine suppliers are reaping the benefits, while airlines are grappling with increased costs and limited options for engine maintenance.
