Jetrader - September/October 2011 - 46

Cockpit instruments freshly removed from an aircraft.

Packed components ready to be shipped to a new aircraft.

“If you have the parts with the ‘magic numbers,’ which are in high demand, there are good business opportunities. We are seeing prices moving in the right direction, moving much closer to pre-recession levels. We are also seeing engines from the classics being sold very quickly and at good prices, which was not the case a year ago,” conﬁrms Comensoli. Structurally market indicators support the argument of an improving market. The demand for the classic, narrowbody aircraft is rising signiﬁcantly. Market experts note that they are seeing a number of small to medium-sized airlines snapping up A320s; aircraft which had been mothballed are now being brought back into service. These aircraft need replacement parts, which are proving a key driver in the current market. According to Derk-Jan van Heerden, AFRA Board Member and general manager of Aircraft End-of Life Solutions, “During the crisis, owners delayed maintenance activity, now this activity is picking up again. There is a backlog of demand for recovered parts, which is another important motor to the aircraft parts business.” “A 737 which has just left service and so has yet to be mothballed can now be purchased for over $1 million; a canny dismantler would be looking to all but double his investment through parting out,” claims Comensoli. Another sign of an improving market is the signiﬁcant rise in lead-in time to get recovered parts overhauled and refurbished, as demand for MRO services has considerably increased. According to Karl Rickard, managing director of Powerjet

Aviation Services, who has served on the AFRA Board, “Last year I could send a part to a shop and they would treat it and recertify it almost immediately, within three days max. Now the lead-in time can be 14 days or more; no one has the slots.” Rickard also notes, “It’s all in the ﬁnances. A year ago, my customers were asking for much longer payment terms, for recovered parts which reﬂected overall economic fragility. Now we are getting back to the 30-day payment cycle, which makes the whole pattern of business easier.” As signiﬁcant sectors of the world economy consolidate the recovery, the demand for more freighter aircraft is also strengthening the hands of those engaged in aircraft dismantling. The requirement of freight tonnage is not being met by new freight aircraft. “We are seeing the opportunities for converting classics from passenger aircraft into freight, which is also driving demand for secondary replacement recovered parts,” states Comensoli. There are also market indicators that airlines are replacing the older A320200s with younger aircraft from the A320 family. This is the ﬁrst time in the aviation industry where airlines are replacing and A320 with an A320, whereas airlines would previously take that next technological step. For example, 737-400 operators became 737-800 operators. However, there are possible clouds on the horizon. As more and more of the classics are brought out of storage and parted out, there is a real danger of parts supply outstripping demand. Certain market players are known to be sitting on signiﬁcant stocks of

However, there are possible clouds on the horizon. As more and more of the classics are brought out of storage and parted out, there is a real danger of parts supply outstripping demand.
narrowbody classics. If the engines and parts from these ﬂood the market in the coming months, it could be problematic for nascent recovery in the parts sector. The demand for recovered parts from aircraft that are older than the “classics,” such as the DC-9 or the MD-80 are showing much fewer signs of improvement and seem unlikely to do so. While the fact that the two leading aircraft manufacturers did not signiﬁcantly slow down, their production rates in the recent downturn has led some observers to speculate that the majority of growth in demand from airlines will be met by new aircraft. However, the backlog of orders at the manufacturers suggests otherwise. In Europe, at least, aircraft dismantlers are quietly conﬁdent that the only way is up regarding prices and demand for recovered parts. Martin Todd is communications manager at the Aircraft Fleet Recycling Association.

46 The ofﬁcial publication of the International Society of Transport Aircraft Trading

Jetrader - September/October 2011

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