Popular narrow-body engine aftermarket set for growth

In 2013, CFM’s new LEAP engine family booked almost 1 400 orders. This marked the first time that the new model surpassed CFM56 in annual order figures. However, while the LEAP’s future is bright, it will take some time for the model to become a real revenue-generator. In the meantime, with new engines rolling of the assembly line and many older power plants still facing second or third shop visits, the CFM56 spares market still has room for growth.

Demand for more efficient narrow-body lift drove Airbus and Boeing to develop new versions of their successful Airbus A320 and Boeing 737 families. As a result, with its exclusive position on the Boeing 737MAX, CFM has the lion's share of the market with over 4 900 firm orders for its LEAP-1A/Bs, accounting for almost 60% of the combined NEO/MAX order book. However, as the demand for air travel continues to grow, aircraft manufacturers were pushed to raise their production rates on the current narrow-body versions as well, which means that the older popular series of CFM engines will stay around for a little longer.

“CFM56 family remains one of the most popular engine types both globally and regionally. Even as CFM is preparing to start the transition towards the next-generation LEAP family, it continues to look at upgrades to the current popular models. This has helped to push CFM56 deliveries to record levels, as in 2013 the manufacturer delivered its 8 500th engine of the type for Airbus, 10 000th for Boeing and 25 000th overall. As a result, the CFM56 family is expected to account for most of the global engine MRO growth - with a 6-7% annual growth rate over the next 5 years. Needless to say, the demand for spares can be expected to grow accordingly,” shares Zilvinas Sadauskas, the CEO of Locatory.com.

CFM56 spares demand is expected to rise steadily until about 2025. First-generation spares demand will fade out much more quickly, as aircraft being parked make more used parts available for the earliest CFM56s still flying. Analysts at Canaccord Genuity estimate that as much as 90% of the spares demand for the early CFM56s is satisfied through used parts. At the same time, the market for newer CFM56 material is currently much smaller. It is forecasted that less than 5% of the CFM56-5B and -7B spares demand is filled by used parts, and should stay that way until A320neo and 737 MAX aircraft begin to outnumber in-service aircraft powered by the newer engines.

“For some time now, we have been observing the growth of used engine parts market via the Locatory.com marketplace. One of the trends is that an increasing number of older model – such as CFM56-3 - operators tend to move away from repairs to the use of reconditioned materials. At the same time, similar strategies have been emerging among the operators of the newer models as well, albeit on a smaller scale. However, there have been changes in how the spares are consumed, as operator behavior is starting to have much more influence on spares demand,” shares Zilvinas Sadauskas, the CEO of Locatory.com. “Specific variables range from the explosion of low-cost operators that use Boeing 737s, powered exclusively by CFM56s, or A320s with engines of the same family, to the increasing utilization of used parts. This will definitely bring new dynamics into the segment, as independent providers gain more opportunities to enter the competition, especially as engines mature.”