AerCap and AFI KLM E&M Form Partnership to Lease LEAP Spare Engines

AerCap and AFI KLM E&M Form Partnership to Lease LEAP Spare Engines

AerCap Holdings N.V. and Air France Industries KLM Engineering & Maintenance (AFI KLM E&M) have entered exclusive negotiations to establish a joint venture dedicated to leasing LEAP spare engines. This collaboration is designed to enhance operational continuity for operators of Airbus A320neo and Boeing 737 MAX aircraft worldwide. Subject to regulatory approval, the partnership will involve joint ownership and management of a pool of LEAP-1A and LEAP-1B spare engines, providing critical support to AFI KLM E&M’s leading maintenance, repair, and overhaul (MRO) customers during quick-turn or performance restoration shop visits.

Addressing Industry Challenges

The initiative emerges amid growing demand for midlife engines, which has led to increased prices and prolonged overhaul timelines. The limited availability of spare engines poses a significant challenge for airlines operating next-generation narrow-body fleets. By combining their resources, AerCap and AFI KLM E&M seek to alleviate these pressures, offering a comprehensive solution aimed at improving fleet uptime and service reliability.

This partnership builds upon a longstanding relationship between the two companies in lease engine support. It leverages AerCap’s extensive global expertise in aircraft and engine leasing and asset management, alongside AFI KLM E&M’s operational proficiency as an airline-affiliated MRO with in-depth knowledge of new-generation aircraft. Tom Slattery, Executive Vice President of AerCap Engines, emphasized the value of AFI KLM E&M’s service capabilities and the strength of their collaboration. Anne Brachet, Executive Vice President at AFI KLM E&M, highlighted the importance of access to LEAP spare engines, noting that the joint venture will enhance operational flexibility and deliver innovative, customer-focused support across the aviation sector.

Market Implications and Future Outlook

The formation of this joint venture is expected to influence the broader engine leasing market. As demand for liquidity in new-generation engine leasing grows, competitors may adjust their strategies to maintain market share, potentially intensifying competition. Other engine lessors might respond by expanding their spare engine inventories or revising pricing models. Concurrently, ongoing supply chain disruptions and the constrained midlife engine market could prompt manufacturers such as CFM International and General Electric to reconsider their pricing and availability approaches.

By combining their respective strengths, AerCap and AFI KLM E&M aim to establish a new benchmark for operational excellence and innovation in engine leasing. The joint venture is positioned to provide essential stability and support to airlines navigating a challenging market environment, reflecting both companies’ commitment to addressing evolving industry demands.