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Will COVID stall the market for the A330’s engines?

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The A330 has over ten variants across all passenger, cargo and military configurations. The engine options for the A330 CEOs are General Electric’s CF6-80E, Pratt & Whitney’s PW4000-100 and Rolls Royce’s Trent 700. Of these engines, the Trent 700 has proved to be the most popular option by far for the fleet, as highlighted in the chart below, and this has led to the re-engined A330neo being a single engine option in the Rolls Royce Trent 7000. The engines are used on both medium and long-haul flights to varying degrees of success in all major global regions and, though Covid-19 has caused a significant reduction in passenger demand for air travel, this has not been evenly felt by all aircraft types.

Using Flightradar24 data within IBA’s aviation intelligence platform IBA.iQ, we can delve deeper to see how the pandemic’s consequences have played out on an engine-by-engine basis. Widebody aircraft have been worst affected, thanks to the global nature of Covid-19 and the associated restrictions on international travel. Despite some respite in the form of a sharp increase in freight demand, there has been little positive news for the widebody market. As a direct result, the engines applicable to these fleets have also been impacted as older examples exit the market creating an increase in spares and the availability of material.

A330 engine type share by region
Chart 1: A330 engine type breakdown by region (source: IBA.iQ)

The Trent 700 and PW4000-100 both have their largest fleets in the Asia Pacific market, the CF6 engines mainly dominating the Europe & CIS region. There are currently 1,738 Trent 700 engines in service globally, 50.6% of the fleet being based in the Asia Pacific region, whilst the in-service CF6 and PW4000-100 engines number 546 and 394 respectively. The PW4000-100 accounts for 51.3% of the Asia Pacific region, whereas the CF6 engines account for 48.3% of the European market. Given these market dynamics, questions have arisen around whether one engine has seen a greater impact than others as a result of Covid, particularly given the variations in age between fleets.

Chart 2: Engine Model Utilisation on A330 (source: Flightradar24)
Chart 2: Engine Model Utilization on A330 (source: IBA.iQ and Flightradar24)

The chart above shows month-to-month utilization by engine family for the A330 fleet and it would appear that the Trent 700 has been massively affected. However, the decline across all fleets has been relatively similar at around 12-15% if we compare April 2019 to April 2020. Since the Trent 700 engine family is the most popular engine type for the A330, it follows that a drop in utilization generates impact on a much larger scale.

GE’s CF6 and Pratt & Whitney’s PW4000-100 are seeing lower utilization figures compared to the Trent 700 due to their smaller fleet sizes. However, recent market recovery has shown an interesting trend favoring the Trent 700 and PW4000-100, both of which are now closer to 30% comparing July 2019 to July 2020 whilst the CF6-80E remains at around 18%. However, this is probably due to the popularity of both fleets in the Asia Pacific region which has seen earlier recovery than other markets.

The long-term impacts of reduced utilization are still evolving. Nevertheless, there are positive recovery signs trending. The most likely short-term consequences will be felt in the engines aftermarket since it is heavily dependent on the fleets being utilised, thus generating a healthy relationship between supply and demand. Given that mature widebody engines are more vulnerable to retirement it is likely that, as part outs and retirements pick up in the mid-term, demand will drop and supply of materials and spare engine will increase.

The PW4000-100 and CF6-80E appear to be more vulnerable given their higher fleet age. However, there are plenty of older Trent 700s in operation which are at risk of a similar fate. An aging fleet combined with operators seeking any opportunity to avoid costly maintenance, the future does not bode well for the fleets.

Maintenance requirements are expected to drop off in a similar pattern to utilization though with a lag of around 6 months. With the question of retirements and parts out surrounding the older members of the fleets, there remains lots of interest in the long-term impact on values which have seen significant softening so far. To understand more about the impact on values, market trends and shop visits, sign up for IBA’s forthcoming Engine Market Webinar .

About the author:

Denesz Thiyagarajan

Engine Analyst @ IBA

Denesz joined IBA in 2020 as an Engine Analyst working within the valuations department. He is responsible for engine appraisals, consultancy, market studies, research and publications. Denesz graduated from the University of Brighton with a MEng in Aeronautical Engineering.

To learn more about using Flightradar24 data to inform your critical business decisions, please contact the Flightradar24 team.

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