Streamlining lease transition requirements. Les Cronin, Director Sales Americas

Transcription

1 Streamlining lease transition requirements Les Cronin, Director Sales Americas MRO Europe Conference London, 15th October 2015

2 MTU Aero Engines business model Group sales: 3,946 M (5,327 M$) COMMERCIAL ENGINE BUSINESS MILITARY ENGINE BUSINESS COMMERCIAL MAINTENANCE Share in sales: ~ 53% Share in sales: ~ 14% Share in sales: ~ 33% Partnerships with OEMs European and U.S. engine Leading provider of engine going back decades Focus on LPT, HPC and TCF Main products: CF6, GEnx, GE9X, GP7000, PW2000, PW1000G, V2500 programs Lead industrial partner to the German Armed Forces and US Air Force MRO service solutions Global network Main products: CF34, CF6, CFM56, GE90, V2500, P&W C engines 2

3 MRO market positioning What does MTU Maintenance stand for? Large MRO and service portfolio from leasing, MRO services to asset management Innovative service solutions and tailored offerings for maximum value Global network Over 15,000 engine shop visits Customer dedication and service 3

4 The growing influence of aircraft leasing companies As air travel grows so does the demand for new aircraft demand for aircraft leasing and financing Close to 50% of all aircraft will be financed via leasing companies by

5 The importance of aircraft leasing companies Top 10 lessors account for 56% of the leased fleet (~ 5,245 aircraft) 66% by value (~ $156b) Growth over recent years has been due to availability of cheap liquidity Leasing companies are a combination of. Finance Company Technical Expertise Asset Trader Aircraft Marketer 5

6 The cost of aircraft lease transition Example: 8-year old aircraft at EOL Additional aircraft maintenance costs Narrow-body = Ø $1.65m Wide-body = Ø $3,0m Operating leases adds costs as EOL conditions supersedes airworthiness condition to provide suitable re-use for the next lessee Additional engineering resources required at EOL by lessee and lessor averages $150K for each party per aircraft Source: IBA Highlights 2015 The cost of a EOL transition is not visible until it is too late 6

7 Typical end of lease conditions & engine related issues Engine condition Engine performance Same condition at redelivery as at delivery - less wear and tear EGT margin in line with the lessee s or world fleet deterioration Minimum hours & cycles remaining since last shop visit AD & SB compliance Full serviceability (PR vs. OH) Full documentation incl. back to birth* No carry over items like Wherever applicable re-inspections etc. No/limited DER content (uncritical parts) Residual value concerns Re-marketability issues * General Material & parts 7

8 What are the interests of the players with leased engine assets Lessor Lessee MRO provider Residual value preservation Smooth transition between lessees Management & optimization of maintenance reserves Influence on shop visit and timing Asset end of life exit strategy Cost of ownership As received engine condition vs. redelivery condition Access to maintenance reserves for pre-consumed life Transfer of warranties and maintenance coverage Technical support Vertical integration of interests via life asset management programs MRO cost optimization Residual value preservation (technical/quality standards) Asset value optimization throughout engine life cycle Comprehensive support for continued operations 8

9 MTU-tailored solution: Lease Enhancement Program (LEP) How does it work? Today s landscape LEP Landscape Lessor Lessor Lease fee & MRO reserves MRO reserves LEP contract/ payment & MRO oversight Lease fee & MRO reserves MTU Operator (Lessee) MTU (MRO) Operator (Lessee) Full maintenance coverage and service MRO services & payment All parties benefit from LEP as a fully MTU (MRO) integrated product 9

10 LEP One-stop solution for asset owners and operators Optimized cost of ownership over the entire life cycle Acquisition (new/used assets) MRO & operations Operator transition Phase-out Lessor Flexible phase-in/-out of engines MRO cost predictability Proactive management Ease of portability throughout the life Spare engine financing Residual value Risk mitigation retention / maximization Minimized inventory End-of-life value maximization Alignment of airframe/ engine life (GSE, QEC, rotables ) Lessee Carefree operations EoL inspections High-quality standards Logistical services Guaranteed thrust 10

11 MTU LEP benefits Enhanced MRO predictability MRO Workload Lessor MRO cost predictability Tailored predictability solutions Lessee Standard pre-defined workscopes (e.g. DERs) Full of engine DOC asset control Cost-optimized build standards over life Ease of EOL return Continued operation Better buying power of lessors Engine records consistency Retention of asset value Maximized predictability and minimized cost for Predictability all parties involved 11

12 LEP benefits Ease of portability throughout the life Complete portability of LEP over the entire service life Ease of transfer from between lessees Severity adjustments applied if >5% of operations in challenging environment (erosion and pollution) No restrictions and limitations Erosive operation A Polluted operation B Neutral operation C MTU LEP provides complete portability and mobility of assets throughout their life and ensures the required maintenance reserves are applied 12

13 Summary Leased fleets grow and so does the transition demands of lessors to protect their assets at all times Know your EOL requirements at SOL including lessor definitions not when it is too late.. Ensure you cover yourself with a well respected and trusted maintenance provider Good fleet management and forward planning will reduce if not eliminate transition maintenance cost exposure MTU s LEP provides a fully integrated engine maintenance coverage through all phases of life including transitions 13

14 Thank you and looking forward to your questions! Les Cronin Director of Marketing & Sales Americas MTU Maintenance Hannover GmbH Muenchner Strasse Langenhagen - Germany Tel Cell: mailto:les.cronin@mtu.de