How to Compare Two Engines. Paul Duplace, Marketing Manager, CFM

8/13/2019 How to Compare Two Engines. Paul Duplace, Marketing Manager, CFM

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How to

Compare TwoEngines ?

May 1, 2008

Financing, Managing &

Maintaining Engines:

Roundtable Summit for

Financiers


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Engine Acquisition

Price

Engine OperationMaintenance

Life Limited Parts

Reliability

Fuel & Oil

Emissions

Fleet Management

Engine ResaleResidual Value

Cost of Ownership

Arentallen

gines

thesa

me??

?

Arentall

engine

sthes

ame?

??

Shoul

dIrea

llycareabo

utthis

???

Shoul

dIrea

llycarea

boutth

is???

EASYTO

COMP

ARE

EASYT

OCOM

PARE

Price

Maintenance


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Engine Acquisition

Price


Life Limited Parts

Reliability

Fuel & Oil

Emissions

Fleet Management


Cost of Ownership

Maintenance

Maintenance

Price


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Shop Visit Rate Reports

Comparable Fleet (Experience, Size, Age and Operations) shouldhave Comparable SVR

Longer Current and Expected Lives for Engine A

Fewer Shop Visit

0,2

0,4

0,6

0,8

1,0

Sept 2002 Jan 2003 Sept 2003 Jan 2004 Sept 2004

Engine AsSVR & UER

are more than3 times* lower

comparedto Engine B's

Engine AsSVR & UER

are more than3 times* lower

comparedto Engine B's

0.0270.027

0.0720.072

0.0220.022

0.0080.008

Engine BSVR

EngineA UER

EngineA SVR

Engine BUER

0,02

0,04

0,06

SVRRate/1000 EFH

UERRate/1000 EFH

Maintenance

Time on wing avoids Shop Visits


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Operating Cost - Cost Generated by Shop Visits

Operating conditions:

42 A/C3000 hours / yearFlight leg 2.0Derate 15%

Shop visits:

25% shorter lives for engine B, due to worldwide fleet dilution effect

(conservative approach)350,000 $ advantage on shop visit average cost for engine A vs engine B(excluding LLPs)

Maintenance

Assumptions


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Operating Cost

50 80

1.2M$ 1.55M$

Base +64M$

Engine A Engine BMaintenance Cost Model Analysis

Number of SV for 42 A/C

within 10 year

Average Cost of a SVAverage Total Cost

Cost Generated by Shop Visits 10 years

Maintenance cost savings of 1.5 M$ per A/COver 10 years of operation

($ constant & no inflation)

Maintenance


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Operating Cost

117 167

1.2M$ 1.55M$

Base +118M$


Number of SV for 42 A/C

within 15 year

Average Cost of a SV

Average Total Cost

Cost Generated by Shop Visits 15 years

Maintenance cost savings of 2.8 M$ per A/COver 15 years of operation


Maintenance


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Operating Cost

6 7

Base ~ 7 - 8 M$


# Spare Engine Recommendation

Cost for spare engines

Cost Generated by Spare Engine

Spare engine savings of ~ 180 K$ per A/C


Maintenance


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Cost of Ownership

Engine Acquisition

Price


Life Limited Parts

Reliability

Fuel & Oil

Emissions

Fleet Management


LLP

Maintenance

Life Limited Parts


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Life Limited Parts Advantage

20

25

30

20

20

20

0 10 20 30

LPT

Core

Fan

x1000 cycles

QTY of LLPsQTY of LLPs Ultimate LivesUltimate LivesLLP Set PriceLLP Set Price

18

25

0 10 20 30Number

1 830 090

2 114 300

0 1 000 000 2 000 000

Engine A Engine B

$

For BudgetaryPurpose Only

For BudgetaryPurpose Only

Lower LLP Cost

$0 $20 $40 $60 $80 $100

Cost / cyc * : $ 105.7Cost / cyc * : $ 105.7 ($2007)($2007)

Cost / cyc * : $ 79.7 *Cost / cyc * : $ 79.7 * ($2007)($2007)

Engine A LLP Cost Advantage: $26 / Cycle / Engine

780 K$ advantage per A/C over 10 years (3000 hrs/year & flight leg 2.0)

LLP


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Cost of Ownership

Engine Acquisition

Price


Life Limited Parts

Reliability

Fuel & Oil

Emissions

Fleet Management


Life Limited Parts

Reliability

Reliability


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Reliability Trend

Engine in Flight Shut Down Trend

Engine Dispatch Reliability Trend

2003 2004 2005 2006 2007

0

0,002

0,004

0,006

0,008

0,010

0,0010,001

0,0020,002

0,0030,003

IFSD:

Delta of 0.001/1000 EFH @Engine A advantage

IFSD:

Delta of 0.001/1000 EFH @Engine A advantage

0,0020,002

Engine B (June 2006 / AI March 2007)

2003 2004 2005 2006 2007

99,85

99,90

99,95

100,00

D&C:Delta of more than 0.03/100

departures @Engine A advantage

D&C:Delta of more than 0.03/100

departures @Engine A advantage

99,9899,98

Engine B (June 2006 )

99,9699,96

99,9399,93

Reliability


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Cost of IFSD, D&C

IFSD & D&C cost savings of about 140 K$ per A/COver 10 years of operation

($ constant & 0% inflation)

(*) based on an annual utilisation of 3000 hours and a flight leg of 2.0

100K$

Base +64M$

0.002 0.003IFSD rate / 1000 EFH

5 7Number of events over 10 yearsAverage Cost of an IFSD

10 year Average Total Cost for 42 A/C (*)

Engine A Engine B

20K$

Base +64M$

0.02 0.05D&C rate / 100 departures13 32

Number of flight impacted

per year for 42 A/C (*)

Cost of one delay (66% of the D&C)

10 year Average Total Cost for 42 A/C (*)

50K$Cost of one Cancellation (33% of the D&C)

Reliability


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Cost of Ownership

Engine Acquisition

Price


Life Limited Parts

Reliability

Fuel & Oil

Emissions

Fleet Management


Fuel & Oil

Reliability

Fuel & Oil


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Fuel Burn Comparison

Fuel Burn starts at the gate Fuel Burn starts at the gate

BIG NEWS !!BIG NEWS !!

Fuel & Oil


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Oil Consumption Comparison

Oil Consumption comparison Easy !!!

but also reliability of oil systemand impact on SV and D&C

Fuel & Oil


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Cost of Ownership

Engine AcquisitionPrice


Life Limited Parts

Reliability

Fuel & Oil

Emissions

Fleet Management


Emissions

Fuel & Oil

Emissions


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Gatwick airport NOx charges for A320 Family

35

30

25

20

15

10

90 100 110 120 130 140 150

From the ICAO certification data sheets

Charges per landing ($)Charges per landing ($)

Thrust (kN)Thrust (kN)

Engine A Engine A upgraded Engine B

Emissions


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Cost of Ownership



Life Limited Parts

Reliability

Fuel & Oil

Emissions

Fleet Management


Fleet Management

Emissions

Fleet Management


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No EMO

With EMO

68 Shop Visits68 Shop Visits28 Shop Visits28 Shop Visits 40 Shop Visits40 Shop Visits

65 Shop Visits65 Shop Visits

23 Shop Visits23 Shop Visits 42 Shop Visits42 Shop Visits

5 transfers 5B3 5B65 transfers 5B3 5B6

Shop Visit BenefitFleet Management


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Cost of Ownership



Life Limited Parts

ReliabilityFuel & Oil

Emissions

Fleet Management


Value

Fleet Management

Residual Value


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Aircraft Residual Value depends mostly on engines

Aircraft/Engine value relationship

Airframe

Engine

Percent of Aircraft ValuePercent of Aircraft Value

Aircraft/Engine AgeAircraft/Engine Age

Scrap valuefor the Aircraft v

Scrap valuefor the Aircraft v

Value

On older Aircraft,engines maintained with OEM parts

& repairs hold the value


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Market Share

Marketability & LiquidityMarketability & Liquidity

Engine A powered A/C

Engine B powered A/C

Number and location of Operators in service

N&S America

587

2256

Europe & CIS

341

2260

Asia Pacific

1425

456

Africa & Middle East

106

318

Value


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CFM & IAE Engine Depreciation

Information from appraisers:

Engine resale value stay constant until the end of production

CFM engine at half life is about 70 to 80% of new engines price

Market demand can make these trend vary

2018

Base Values,

from Avitas BlueBook (Constant $), 20076.0M$

5.5M$

5.0M$

4.5M$

4.0M$

3.5M$

3.0M$

2006 2008 2010 2012 2014 2016 2018

Year

CFM higher resale value : +7.5%

CFM56-5B4/P

V2527-A5

Year

6.0M$

5.5M$

5.0M$

4.5M$

4.0M$

3.5M$

3.0M$

2006 2008 2010 2012 2014 2016

Base Values,from IBA Engine Values Book (Constant $), 2007

CFM56-5B4/P

V2527-A5

CFM higher resale value : +9.1%

Higher resale value for CFM56 engines :for one engine at half life CFM56-5B4/P vs V2527-A5 :

+ $360,000 from Avitas+$470,000 from IBA

Higher resale value for CFM56 engines :for one engine at half life CFM56-5B4/P vs V2527-A5 :

+ $360,000 from Avitas+$470,000 from IBA

Value


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CFM56 Residual Value Advantage

Higher market value, from different appraisersHigher market value, from different appraisers

CFM56 engine market value advantage: up to +9%

Base Values, from Avitas BlueBook, 2007

6.0 M$

5.5 M$

5.5 M$

4.5 M$

4.0 M$

3.5 M$

22k 23.5k 27k 30k

CFM56

V2500

Thrust ratingThrust rating

Base Values, from IBA (Engine Value Book), 20076.5 M$

5.5 M$

4.5 M$

3.5 M$

22k 23.5k 27k 33k

CFM56

V2500

Thrust ratingThrust rating

Value


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Upgrade Kits improve the asset value

400

350

300

250

200

150

100

50

0

5B/3

7B/3

ASCEND IBA

$K$K

Value

IBA and ASCEND each

performed an independent

assessment of the Tech Insertion

Upgrade

Small differences are explainedby the use of slightly different

assumptions

Report represents the opinion ofIBA and ASCEND and is

intended to be advisory only


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Potential impact of non OEM materials on residual value

and up to 65% if the whole engine need to be put backto the OEM standards

and up to 65% if the whole engine need to be put backto the OEM standards

OEM

Non-OEM ?

Acquisition Maintenance Disposition

Estimated by independentappraisors between10% to 26% on a mid-lifeCFM56-3 engine

Estimated by independentappraisors between10% to 26% on a mid-lifeCFM56-3 engine

Engine valuation life cycle

EngineProjectedValue

EngineProjectedValue

Value


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CFM genuine parts

OEM support


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PMA blades Source 1

CFM genuine parts

PMA blades Source 1

OEM support


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PMA blades Source 2

CFM genuine parts

PMA blades Source 1

PMA blades Source 2

OEM support


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STCH Spool Source 3

CFM genuine parts

PMA blades Source 1

PMA blades Source 2

STCH Spool Source 3

OEM support

No One has the Data to Support this ConfigurationNo One has the Data to Support this Configuration


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When comparing engines, see global !

Cant see the forest for the trees ?

Dont hesitate to ask questions


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How to Compare Two Engines. Paul Duplace, Marketing Manager, CFM

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