Aircraft Engine Leasing Companies: Leasing Options and Trends

Aircraft engine leasing companies offer a range of leasing options to suit different needs and budgets. These options include operating leases, which allow airlines to use an engine for a set period in exchange for monthly payments, and finance leases, which provide a more long-term arrangement.

Airlines can choose from a variety of leasing terms, from 5 to 15 years, depending on their needs and the condition of the engine. Some leasing companies also offer flexible lease terms that can be adjusted to accommodate changes in airline operations.

Leasing companies like Engine Lease Finance Corporation (ELFC) and AerCap Holdings N.V. have a significant market share in the aircraft engine leasing industry. These companies have a large fleet of engines under lease and provide a range of leasing options to their customers.

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Jet engine leasing rates can vary greatly depending on the company you choose. Willis Lease Finance Corporation, a pioneer in the industry, offers competitive rates that may be lower than those set by original equipment manufacturers (OEMs).

Willis Lease Finance Corporation has been in the business for over 30 years, with a strong track record of success. The company operates in aviation services, specializing in leasing spare engines and other aircraft-related equipment to commercial airlines, engine manufacturers, and maintenance, repair, and overhaul (MRO) providers worldwide.

Hanwha, a South Korean conglomerate, has also entered the market with its engine leasing platform, Hanwha Aviation. This new platform aims to build a portfolio of over 1,000 assets over the next decade, providing flexible and innovative solutions for aircraft and engine leasing.

The main difference between OEMs and independent leasing companies like Willis Lease Finance Corporation and Hanwha Aviation is the range of engine types they offer. OEMs typically only deal with their own engine products, while independent leasing companies like Willis Lease Finance Corporation offer a broad product line, including engine types from all major manufacturers.

Here are some key features of the leasing companies mentioned:

Willis Lease Finance Corporation's North American CFM56-7B Engine Sharing Pool provides services for more than 600 aircraft, making it the market leader in cooperative engine sharing pools.

WLFC offers customized solutions that enable customers to better budget and reduce costs, expenses, and risk. This is achieved through regular and close interaction with airlines, allowing for the development of more collaborative and tailored solutions.

With over 40 years of experience in engineering, maintenance, and airline operations, Garry Failler has a deep understanding of the industry, bringing valuable expertise to WLFC's customers. He oversees various services including leasing and technical support.

Even without a comprehensive HCM program, JSSI can still provide support for off-wing engine events, offering a range of leasing solutions and maintenance management services. Their on-site technical representatives ensure aircraft engines are returned to service efficiently, while also monitoring quality standards and costs.

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We offer customized solutions to help you better budget and reduce costs, expenses, and risk. This is what sets us apart from others in the industry.

Garry Failler, a 40-year veteran in engineering, Maintenance, Repair & Overhaul (MRO), and airline operations, leads our customized services. His expertise is invaluable in developing tailored solutions for each client.

We provide short-term leasing options, which allows us to regularly interact with airlines and develop collaborative solutions. This is a unique approach that benefits our clients in the long run.

Lynn McMillan, a seasoned HR leader with 20 years of experience, also plays a key role in our customized services. Her strategic thinking helps drive business solutions that align with our clients' goals.

Our customized services can help you navigate complex maintenance events, such as engine overhauls. We'll work with you to find alternative solutions, like jet engine leasing, to keep your fleet in the air.

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Lease Maintenance is a crucial aspect of jet engine leasing, and it's essential to understand your responsibilities in this area. You'll be required to perform routine inspections or basic maintenance on the leased engine while it's on your aircraft.

Routine inspections or basic maintenance may be required, and you'll need to know who's responsible for performing and paying for the maintenance as written in the lease agreement. This could be you, the lessee, or the lessor, depending on the terms of the agreement.

Engine overhauls can be costly and time-consuming, and with shops at full capacity, scheduling can be up to six months out. This is why alternative solutions like jet engine leasing are becoming increasingly popular among business aircraft operators.

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Willis Lease faces increased competition in the end-of-life engine leasing market. This is forcing the company to diversify its services and find new ways to grow.

Other lessors, such as Rolls-Royce, are offering engine and landing gear exchange services, which is changing the way business is done in the industry. This shift is making it harder for Willis Lease to stand out.

A wave of technological change is about to hit the MRO sector, with most companies expected to use big data, aircraft health monitoring, and predictive maintenance systems by 2020. This could cut 15-20% of MRO spending from the aftermarket.

New competitors, including Japanese lessors, are entering the market and increasing competition. These new entrants are expected to change the dynamics of the industry.

Willis Lease will need to grow its expertise and find new ways to find aircraft and engines, such as forming strong relationships with airlines, in order to succeed in this competitive environment. Aggressive pricing from China is also making it harder for companies to grow through new sale/leasebacks.

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The aircraft engine leasing market has seen significant growth in recent years, with a notable increase in demand for high-efficiency engines. This is driven by the need for airlines to reduce fuel costs and emissions.

A key trend in the industry is the shift towards more efficient engine types, such as the high-bypass turbofan. These engines offer improved fuel efficiency and lower emissions, making them an attractive option for airlines.

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The commercial aircraft market is a massive industry, worth $610 billion, but the spare engine market is relatively small, at $29 billion.

This size difference has led investors to focus on aircraft rather than engine subcomponents in the past.

In reality, engines make up a significant portion of the commercial aviation finance market, with leased engines accounting for nearly 40% of all leased parts.

The value of engines behaves differently than aircraft and airframes, and understanding these differences is crucial.

There's no perfect substitute for an aircraft engine currently, and the threat of substitutes for air travel is minor.

Digital replacements for in-person meetings and other forms of high-speed transport may affect travel decisions, but they won't replace the demand for air travel anytime soon.

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As an aircraft ages, the engine value becomes a significant proportion of the total value of the whole aircraft. This is especially true around half-life, which is typically 12.5 years out of a 25-year functional life.

Airframes, on the other hand, are depreciating assets, with values decreasing significantly over time. This means that a 5-year-old aircraft can have a substantially different value than a 25-year-old one.

Engines, however, can be restored to like-new condition with maintenance, which means their value is not influenced by age. A 5-year-old engine in good maintenance condition can have the same value as a 25-year-old one.

The value of an engine is heavily influenced by its maintenance condition, with core values declining as the engine ages. As the engine fleet ages, it's essential to focus on robust technical and asset management to capture residual value.

Here's a comparison of airframe and engine values over time:

Jet leasing can be a complex process, but it's essential to understand the basics to make informed decisions.

Leasing rates may include a per day or per hour cost, or even a flat event fee, set by original equipment manufacturers (OEMs), independent lease companies, or maintenance shops.

To compare rates, look for a cost that correlates with your specific aircraft utilization. If you fly fewer hours per month, you may negotiate a smaller daily rate with a higher hourly rate.

High-usage operators may prefer a larger daily rate with a lower hourly rate. This is a common consideration when negotiating lease rates.

Willis Lease Finance Corporation is a pioneer in the business of jet engine leasing, with over 30 years of experience. It specializes in leasing spare engines and other aircraft-related equipment to commercial airlines, engine manufacturers, and maintenance, repair, and overhaul (MRO) providers worldwide.

Willis Lease operates in a competitive market, with most of its competition consisting of OEMs that only deal with their own engine products. In contrast, Willis Lease offers a broad product line of popular commercial jet engines.

Leasing options include short-term operating leases and sale/leaseback financing. Operating leases are short-term, typically less than 75% of the anticipated useful life of the asset, and provide cash flow benefits compared to finance leases.

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Willis Lease provides a unique service through its cooperative engine sharing pools, which include over 600 aircraft in the North American engine sharing agreement. This agreement covers CFM56-7B engines used to power Boeing 737 NG aircraft.

Here are some key points to consider when evaluating jet leasing options: