GE90 engines are “providing a near-term boost” to the MRO sector because the engines, primarily for the 777-300ER, are needing shop visits sooner than expected, says Canaccord Genuity analyst Ken Herbert.
“As part of our research, we heard that the 777 and GE90 engine inductions were running ahead of schedule, basically the opposite problem as the industry is facing with the CFM56 engines, which are lasting on-wing longer than expected,” writes Herbert in a 15 April research note, which includes a quarterly survey of more than 60 MRO providers on several topics.
GE confirms that there has been an acceleration in shop visits for some GE90 engines, “due to a known corrosion issue impacting the stage 1 HPT [high pressure turbine] shroud," says a spokesperson for the Cincinnati-based engine manufacturer. The issue has primarily affected aircraft flying in "hot and harsh" environments, says GE.
The impact of this issue was primarily seen last year, says GE. "We've got it figured out, we've worked with the operators--they know we know," says the spokesperson.
The manufacturer says a "high concentration" of the engines are covered under GE's OnPoint agreements, which would allow those operators to have the issue fixed without incurring extra costs. GE is also providing services like engine water washes to prevent the corrosion, it says.
GE engines power about 68% of the approximately 1,160 777s in-service today, says Herbert, compared to about 18% of the fleet having Rolls-Royce’s Trent 800 engines and 14% with Pratt & Whitney PW4000 engines. The engine type will continue to drive engine MRO demand for the 777 in the next five to ten years, he says, in part because the GE90 is the only engine available for the 777-300ER.
GE provides about 65% of MRO work for the GE90 fleet today, Herbert estimates. However, MROs are adding capabilities and could gain market share as the fleet ages. Air France Industries KLM Engineering & Maintenance, the largest airline MRO provider for the GE90, has constructed a new engine test cell in Paris for engines including the GE90-94 and -115 models.
MTU and Haeco’s Taikoo Engine Services (Xiamen) will also see benefits from this growth with their respective GE90 MRO capabilities, says Herbert.
The GE90 fleet typically requires between 250 and 300 shop visits per year, says Herbert, noting that 2014 numbers will be on the high end of this range by the end of the year and could exceed it by 2015. The growth rates of shop visits this year and next will likely exceed 15% for the GE90, he says, noting that the longer term trend is 10% to 15% growth through 2020.
New sales for GE90 parts will be strong for the next couple of years and only one or two are likely to be parted out this year, says the study. But the rates could increase.
“We do believe the part-outs on 777 aircraft and the engines will be faster than many in the industry expect,” writes Herbert.