Airlines in the US and Europe are rushing to find spare parts and engines and avoid flight cancellations after engine-maker Pratt & Whitney issued a product recall last month.
Pratt & Whitney’s announcement in July that more than a thousand engines would need to be removed from Airbus aircraft and inspected has forced a number of airlines – including Spirit Airlines, JetBlue Airways and Hawaiian Airlines in the US, and Wizz Air in Europe – to change flight schedules or ground aircraft.
Pratt & Whitney issued the recall after it discovered that contamination in the metal used to manufacture certain engine parts could cause cracks. Parent company RTX said that about 1,200 of the company’s 3,000 geared turbofan engines would need to be inspected earlier than planned. Roughly 200 of these inspections will take place by mid-September.
The GTF engine, which was introduced in 2016, is one of two that can be used in the Airbus A320neo narrow-body jet, the world’s best-selling aircraft.
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Aer Lingus, which operates a number of the A320neo aircraft, is not affected by the recall as its planes use the alternative CFM International Leap engine.
The Irish airline took delivery of its first Airbus A320neo last September and says it is flying on the its high-demand short-haul routes, including Dublin-London.
Rival Ryanair is also unaffected by the crisis as it operates only Boeing aircraft.
Wizz has cut its growth target, is considering temporarily scrapping some flights or routes, and had warned that the engine problems are putting pressure on maintenance operations. Spirit told investors this month that, with fewer aircraft to fly, “we will likely be overstaffed” in the fourth quarter and early in 2024.
JetBlue chief operating officer Joanna Geraghty told investors this month that the company was looking to lease engines to minimise the fallout of removing “a handful” of engines from aircraft next month.
“We are trying to take whatever self-help measures are available,” she said. “But as you know, the supply is pretty constrained.”
The recalls threaten RTX’s free cash flow, said Melius Research analyst Rob Spingarn, but “arguably worse is the damage to Pratt’s reputation as a provider of reliable large commercial engines”.
RTX has promised to compensate airlines. Chief executive Greg Hayes said on an earnings call last month that the recall was “not an existential threat” to either RTX or Pratt & Whitney, but he acknowledged, “it will be expensive”.
Aircraft engine supply has been tight for more than a year as the big manufacturers Boeing and Airbus have struggled to meet demand for new planes.
Pratt & Whitney’s current manufacturing issues add to ongoing durability issues that have dogged its GTF engine.
More than 57 airlines have their GTF-powered aircraft parked or stored, according to consultancy IBA.
Analysis by data provider Cirium found that about 11 per cent of the GTF-powered A320 fleet delivered so far is currently parked, compared with just more than 2 per cent for aircraft powered by rival Leap engines made by CFM International.
Almost a third of those parked aircraft belong to Indian carrier Go First whose operations remain suspended pending bankruptcy proceedings.
The Pratt & Whitney engine recall is “simply another unwelcome issue which leaves airlines potentially short of capacity,” said Rob Morris, head of Cirium’s consultancy business Ascend.
Wizz has cut its summer growth target from 30 to 25 per cent year-on-year because of the recall. Chief executive József Váradi said it had added to the “creep” of supply chain problems. Together with too few spare engines and packed repair schedules, “that affected the availability of the aircraft, that affected the integrity of the operations”.
At the same time, airlines are extending lease agreements in response to booming travel demand, and demand for older aircraft is outstripping supply.
Aengus Kelly, chief executive at the world’s biggest lessor, AerCap, said about 40 per cent of used aircraft sales in the second quarter went to airlines, up from 20 per cent before the pandemic. Engines are in demand too, representing up to 40 per cent of AerCap’s second-quarter asset sales.
Lufthansa bought four wide-bodied A350 planes in May that Latam Airlines offloaded during a bankruptcy process, while Finnair leased two A330s to Australia’s Qantas after the closure of Russian airspace limited its long-haul operations.
“Airlines need to ensure they have access to aircraft to be able to maintain schedule integrity, and the leasing channel is the best option currently,” said TD Cowen analyst Helane Becker. “Lessors are generally happy to sell . . . as they are usually able to book a gain.”
Paul Geaney, chief commercial officer of lessor Avolon, said aviation’s “fundamental supply and demand imbalance” would last for several years. – Copyright The Financial Times Limited 2023
