keadyAirlines find the grass isnât always greener with new enginesPublished Mon, Jun 8 20261:32 PM EDTUpdated Mon, Jun 8 20262:33 PM EDTLeslie Josephs@lesliejosephsShareShare Article via FacebookShare Article via TwitterShare Article via LinkedInShare Article via EmailKey Points - Airline CEOs said at the industryâs largest annual gathering in Rio de Janeiro that more fuel-efficient engines have fallen short of availability and reliability standards. - That means carriers have to take engines out of their planes for maintenance sooner than they expected, which is eating into the cost savings they were supposed to get from new engines. - Engine manufacturers say theyâve made strides in improving reliability and production.
In this article - GE-2.36 (-0.71%) - BA-0.16 (-0.08%) - RTX+0.19 (+0.10%) Follow your favorite stocksCREATE FREE ACCOUNTTechnicians work on an engine at GE Aerospaceâs engine shop in Lafayette, Indiana.Leslie Josephs/CNBC RIO DE JANEIRO â Airplane engine makers have fallen short of what they promised airlines, major carriersâ CEOs say, a problem vexing an industry that has struggled for years with aircraft shortages and more recently, a doubling of fuel prices. Itâs a paradox: Engine makers dazzled carriers with more fuel-efficient options for new planes from Boeing and Airbus. But production shortfalls and disappointing reliability with those engines are becoming costly problems, CEOs said in interviews at the industryâs largest annual gathering here. Airline executives said theyâre being forced to remove engines and take them for maintenance into crowded shops earlier than expected, which is driving up costs and sucking up the fuel savings they were supposed to get from the engines. Airline leaders told CNBC this week that travel demand is still strong despite higher fares, so having aircraft on the ground means money left on the table, just as a $100 billion higher fuel bill this year is slashing airline profit prospects. Alexis von Hoensbroech, CEO of Canadaâs WestJet, told CNBC in an interview ahead of the more than 370-airline International Air Transport Associationâs annual assembly that the new engines promising fuel savings of around 15% or more compared with earlier models were âengineering marvels.â âHowever, as you push the limits, it sometimes comes at the cost of reliability, and what we all are seeing is that those engines have to go into unscheduled maintenance far more frequently than prior engine generations,â he said. Newer models of aircraft engines burn hotter, allowing them to use less fuel. Thatâs key since fuel is airlinesâ biggest cost after labor. But that can also mean they wear out faster, which can ground planes, though carriers keep some spare engines. Von Hoensbroech and other airline executives told CNBC that the new the engines have not reached the reliability that airlines need, through there have been improvements. âThatâs a big struggle, because it adds a lot of costs,â he said. âSo a lot of the fuel savings are in fact eaten up by unplanned maintenance costs.â âLack of enginesâ Manufacturers have invested heavily in expanding engine overhaul and other maintenance capabilities, while third-party shops have also seen a windfall. New engines are costly, but aircraft production is still behind schedule, and thatâs keeping older engine values up, too. For example, a CFM56 engine made by GE Aerospace and its French partner Safran that powers older Boeing 737s was going for $9.2 million at the start of the year, up 17% since 2019, according to IBA Group. A Pratt & Whitney PW1127 for newer Airbus narrow-body planes was up more than 57% over that time, according to the aviation intelligence and advisory company. Engine overhaul and maintenance has become a more than $58 billion business. watch nowVIDEO11:31Why airlines like American are scrambling to make engines last longer Willie Walsh, the outgoing director general of IATA, told the conference in Rio de Janeiro that he is âdeeply disappointed customers have not dented manufacturer finances,â and pointed to a jump in engine supplier profits. âMy message to the engine [original equipment manufacturers] is simple: Stop gouging us and get back to making great engines that work and that last,â he said. âAllowing these failures to extend into the next decade is totally unacceptable to the customers.â For its part, GE Aerospace, which makes engines for both Airbus narrow-body A320 planes and Boeing narrow-body and wide-body aircraft, said it has been working on improvements and has also increased output. âWeâve made significant investments to enhance time-on-wing, reduce cost of ownership, and increase output and we will continue to invest to drive meaningful improvements,â the company said in a statement. âWhile there is more to do, we are making progress every day to continue to deliver long-term value for our customers.â GE powers Boeingâs bestselling 737 Max with its CFM joint venture with Franceâs Safran. Those Leap engines are also options on the Airbus A320 narrow-body planes, with Pratt & Whitney as the other. GE engines also are used on a majority of 787 Dreamliners. United Airlines CEO Scott Kirby praised GE for making improvements, but said there are still concerns for the industry. âThe biggest constraint for at least the next five years is going to be lack of engines,â Kirby said. A Rolls Royce jet engine on display at the Rolls-Royce aircraft jet engine production and repair facility in Blankenfelde on February 28, 2023 near Berlin, Germany.Omer Messinger | Getty Images News | Getty Images He pointed to a shortfall of parts like forgings and castings and said when it comes to smoothing out supply, âI donât really think weâve started yet.â Pratt and some of its customers have the added problem of a manufacturing defect from several years ago. The issue forced airlines to ground planes with those engines, which was one of the biggest challenges that hit now-defunct Spirit Airlines. Prattâs parent, RTX, didnât immediately comment. Rolls-Royce, another manufacturer, said it is still working on efficiency. The company said it has invested ÂŁ1 billion ($1.33 billion) in its Trent engine fleet and a mode that âoffers up to triple time on wing, resulting in improved fleet planning and a reduced maintenance burden for customers.â Read more CNBC airline news
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