Airplane engines are in short supply. The business of fixing older ones is booming

TULSA, Okla. — Parts and labor shortages. Delayed deliveries of new planes from Boeing and Airbus. Engine recalls. Premature repairs. It’s all piling up and aircraft engine workshops around the world are overcrowded.

As record numbers of travelers boarded planes this summer, airlines anxiously awaited repairs and overhauls to their engines.

Engine repair and overhaul has grown from a $31 billion business before the pandemic to $58 billion this year, according to Alton Aviation Consultancy. It's a cash cow for engine manufacturers like GE Aerospace and the hundreds of smaller specialists who service GE engines and other GE engines, Pratt and Whitney and Rolls-Royce.

American Airlines'The solution is to do more work yourself.

“We only have one customer and that's American Airlines doing our job,” said American's chief operating officer, David Seymour. “We can control our own destiny in that area.”

In the bustling engine shop at the airline’s 3.3 million-square-foot maintenance facility at Tulsa International Airport, the largest space in the world, American is on track to increase overhauls by about 60% from 2023 to more than 16 engines a month this year. That’s up from five a month in 2022. It has added about 200 jobs there, as well as more equipment such as cranes to hang the 2-ton engines during overhauls.

The work focuses on CFM56 engines, made by a joint venture between GE and France's Safran. They power American's older Boeing 737 workhorse jetliners and many of its Airbus A320s. Those narrow-body planes make up the bulk of American's mainline fleet, which numbers more than 960 aircraft, according to an annual securities filing from the company.

“I can have these engines rebuilt and taken through the shop in less than 60 days, unlike [outside] shops nowadays [are] “120 to 150 days, in some cases even more than 200 days,” said COO Seymour.

Much of the bottleneck in engine repairs stems from the industry’s struggling post-pandemic recovery, when companies laid off thousands of skilled workers. Airlines that deferred maintenance during the travel slump rushed to get planes flying again when demand picked up, only to face labor and experience shortages and shortages of key items from engine parts to airplane seats.

Meanwhile, Airbus and Boeing are lagging behind in delivering new, more fuel-efficient planes, forcing airlines including American to hold on to older aircraft longer than planned.

Airbus this summer cut its aircraft delivery forecast and announced cost cuts due to supply chain issues and delays in landing gear and engine deliveries.

“I would also call it the surprise factor for 2024,” Airbus CFO Thomas Toepfer said during an earnings presentation on July 30.

In addition to supply chain issues, Boeing's planes have also been delayed as the company grapples with a safety crisis after a door panel on one of its 737 Max planes became detached in mid-air earlier this year.

Because many engines require overhauls every 7,000 flights, keeping older planes longer means more routine maintenance and refreshes, which increases demand when they do go into the shop. Those weeks-long overhauls are grueling: They can cost $5 million each and can cost twice that for wide-body planes, said Kevin Michaels, a managing director at AeroDynamic Advisory.

At American’s Tulsa shop, workers remove hundreds of parts, replace those with limited lifespans, and clean and inspect others. Among other things, they’re sprayed with a fluorescent penetrant to make defects visible under a black light.

But key parts are hard to find and they have to be flawless. They are also expensive. The dozens of engine compressor blades can cost $30,000 each.

In addition, some newer engines (which run hotter, take in more air and use less fuel than older types) are being delivered to engine factories earlier than expected, frustrating airline CEOs.

“No company can tolerate that its most important assets are not used to generate revenue,” said Martin Gauss, CEO of AirBaltic.

The Riga, Latvia-based airline is an Airbus A220 customer and has had to lease aircraft in recent years to compensate for the number of grounded planes.

“Unfortunately, passengers are not happy if they can't fly new planes,” he said. “It's a problem that will be over one day. We thought it would be over by now. I would give it two more years and we'll be through it.”

There is another problem clogging up engine shops: a Pratt & Whitney engine recall of some of its narrow-body engines. Given the ongoing problems, a number of low-cost airlines, including JetBlue Airlines And Spirit Airlinespostpone the delivery of new aircraft to save money.

“It's kind of a devil's brew that has had a huge impact on the engine supply chain,” said AeroDynamic Advisory's Michaels.

The high demand for engine overhauls is lucrative for engine suppliers, who make billions of dollars maintaining the engines they sell for new aircraft.

GE Aerospace generated $11.7 billion in engine maintenance, repair and overhauls in the first half of 2024, representing 65% of revenue.

“When it comes to motorcycles, it’s a razor business,” said Michaels, describing how buying razors at a drugstore can mean years of repeat business for replacement blades. “So the money is made in the aftermarket of the motorcycle business.”

GE Aerospace, which became an independent company in April, announced in July that it will invest $1 billion over the next five years to modernize its engine shops worldwide.

For many airlines, there are few alternatives to costly engine overhauls as demand for replacement engines increases. This is especially true if the airline has only one type of aircraft or a model that is supplied by only one supplier.

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

Both Pratt & Whitney and CFM engines powering the newer Airbus A320neo aircraft have now recorded lease rates of $127,000 per month, up from $80,000 and $85,000 respectively in 2017, IBA said.

Leasing companies such as AerCap and Avolon have purchased many spare engines due to high demand.

Yet it is still difficult to get into a motorcycle shop.

Delta Airlineslike American, overhauls, repairs and services its own engines. It also does work 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 a July interview. “It would be easier to get into a Taylor Swift concert.”