AAR looks to adapt in a changing engine teardown market
Despite the aformentioned challenges, there’s still lots of good news. The engine market has proven itself to be an industry that can make money and remains integral to the airline business. For AAR, I’m confident this will continue due to our efforts to diversify over the past decade. Part-outs have changed, despite most of the business still being about buying assets, tearing down assets and selling parts. We’ve seen a constant increase in requirements from customers who want to do engine exchanges, buy serviceable engines and sell unserviceable assets to AAR. It’s still viewed as a more financially beneficial option to avoid the shop visit. Some of our competitors are more recently tearing down new engines, although AAR has never done it. When a company tears down a new engine, they will get a premium price for the more desirable parts. However, some of the slow moving parts will mean competing against the whole market, even if the materials are new.
Which engine types are proving particularly popular for teardowns?
A constant flow of V25-A5, and CFM-5B and -7B turbofan engine types would prove very popular. In the future, more GE90 engine family types could one day become more in demand and that could really make an impact. But the GE90 is still a market that AAR has yet to touch and while by no means unattractive, we still need more information to make sure that it represents the next-generation for the used engines market.