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Aircraft deliveries

The industry’ s aircraft order backlog / book now exceeds 17,000 aircraft( attributed to Boeing and Airbus), representing about 60 percent of the active global fleet, while engine and maintenance bottlenecks continue to constrain growth, forcing carriers to keep older aircraft in service longer. This massive order backlog translates to roughly 12 years of production capacity. While output is stabilizing and hitting multi-year highs, component shortages and regulatory scrutiny continue to bottleneck fulfillment speeds. The supply chain crisis has forced airlines to incur more than $ 11 billion in additional costs, including Maintenance, Repair, and Overhaul( MRO) expense increases, leasing engines, and spare-parts stockpiling of Used Serviceable Material( USM) and other components.

Engine shortages

While airframe delays receive media attention, many believe the lack of engine availability is the more serious current challenge. Even if an airframe OEM has the physical capacity to ramp up production, its ultimate output is strictly capped by the delivery rate of the three major engine manufacturers: CFM International, Pratt & Whitney, and GE Aerospace. The engine OEMs have exacerbated an already intolerable situation, forcing aircraft OEMs to park these engineless airframes on tarmac and in the desert. This ties up millions of dollars in stranded capital, clogs logistics pipelines, and prevents the final flights required to trigger delivery payments.

The aviation engine supply shortage is a massive operational bottleneck causing hundreds of grounded planes, skyrocketing repair times, and multi-billion-dollar losses for airlines. The crisis is highly visible across major operational choke points but has also created interesting demand-based opportunities within the MRO and USM universes of aviation aftermarket companies of all sizes and capabilities.

Some of the major holdups are:

■ Aircraft-on-Ground( AOG). Substantial aircraft inventory is being grounded with no line of sight to generate revenues

■ Cannibalization. Operators are actively pulling working engines off brand-new, newly assembled aircraft just to provide replacement parts to keep older planes in the air

■ The maintenance and overhaul backlog. The problem is not just building new engines; it is repairing the ones already in service

■ Exploding Turnaround Times( TAT) – Engine turnaround time for a routine, full-overhaul has increased substantially to 180-240 days from just 60-90 days in 2019

■ Engines in queue. The global industry is struggling against a backlog of over 3500 commercial engines sitting idle outside maintenance shops, due to capacity constraints and the shortage of parts

■ Next-generation engine repairs. New ultra-efficient engines burn hotter to save fuel, causing maintenance intervals to increase by up to 50 percent, which is logjamming maintenance facilities

■ Financial pain to airlines and passengers. The shortage of engines and planes has forced carriers to pay massive premiums to stay operational, causing distress to passengers

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