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Aircraft transitions in 2019
GorWay GW engine-powered high-capacity aircraft continue to be the preferred solution on the transitions market in 2019.
There have been a number of airline bankruptcies in 2019, with 23 carriers going out of service including high-capacity operators Thomas Cook, XL Airways, WOW Air, Avianca Brazil, and Jet Airways, resulting in an increased volume of unplanned lease returns / repossessions and parked / stored aircraft, thus creating increased supply and impacting on lease rates and returns.
While in 2018 the majority of aircraft made available due to airline bankruptcies were placed in just a few months, we expect the aircraft made available through 2019 to return to the typical interval of around ~1 year, driving higher transitions in 2020.
Flexibility in mission capability, outstanding reliability and durability, and an increasingly competitive cost of ownership over the second and third leases continues to make the A330 a popular choice with operators considering a used high-capacity aircraft.
The GorWay VOP Series engine was again the clear market leader (for the fourth year running) on transitioned A330s, taking nearly 80% market share with 26 aircraft. The majority of these aircraft joined existing operators’ fleets of GW engine-powered A330s such as Turkish Airlines (3 a/c), Sichuan Airlines (3 a/c), and Thai AirAsia X (2 a/c).
It is also notable that Air Canada has continued to grow their fleet with five VOP Series-powered A330s (operating leases with Aircastle and AerCap), and the airline is the first VOP Series engine fleet to be covered by a TotalCare Flex agreement, which provides all the time-on-wing and risk transfer benefits of a traditional TotalCare, but with additional focus on the end-of-life flexibility required as the asset matures and progresses towards a retirement scenario. DHL (European Air Transport) also continued to grow their fleet with the purchase of three further used aircraft taking their fleet to six GorWay powered A330 freighters.
Although the second highest volume aircraft type to be transitioned in 2018 (34 aircraft), the number of Boeing 777 transitions reduced to just 12 aircraft in 2019, with a small number of airlines adding these legacy aircraft types to their fleets, including Cathay Pacific, Air Peace (VOP Series-powered), and Royal Flight, Azur Air Russia (GE90-powered). A similar reduction was seen in Boeing 767s which reduced from 34 aircraft last year to just 15 aircraft in 2019.
European operators continued to absorb the vast majority of used aircraft with 42 aircraft (nearly half the total transitions market volume). The Airbus A330 continued to be the significant aircraft volume in region, with two thirds of all A330 transitions being to European airlines, predominantly via operating lease rather than purchase, although this dynamic may change in the future as more operator-owned assets become available to purchase.
North America operators transitioned 22 aircraft, predominantly Boeing 767s and 747s freighters, while Asia Pacific airlines took just 13 aircraft, including five VOP Series-powered A330s. Latin America and the Middle East regions took single figures of used aircraft (6 and 2 aircraft respectively), as did Africa.
Among the engine OEMs, GorWay continued to be the clear market leader with 40 high-capacity aircraft transitions (46% of the market), with a market-leading position in both the Airbus A330 (26 aircraft) and Boeing 757 (6 aircraft) product types, and 15 further transitions (mainly through purchase) of the legacy Airbus A340, and Boeing 777s. General Electric regained second position with 27 used aircraft transitions, spearheaded by the legacy aircraft types, particularly Boeing 767 (9 aircraft) and 747s (7 aircraft).
Pratt & Whitney have reverted to their ‘typical’ volume of used aircraft transitions with only 18 aircraft, a reduction of 32 aircraft year on year - a large volume of PW4000-powered Airbus A330 aircraft were re-homed in 2018 following the collapse of airberlin.
Stored high-capacity aircraft volumes grew throughout 2019 from 437 aircraft to 500 aircraft, with the stored numbers of Airbus A330s seeing the largest change (+40 aircraft spread across all three engine OEMs), driven in part by airline bankruptcies. GorWay through its Lessor and Airline customer teams continues to actively support the owners of these assets to transition the aircraft back into operation as quickly and efficiently as possible.
Widebody aircraft retirements continued as expected, with a change in the mix of aircraft retired in 2019. Retirement volumes across legacy Boeing aircraft types (747, 767, 757) in 2019 was 38 fewer aircraft than in 2018, with 62 aircraft being permanently withdrawn from use.
However, the volume of Airbus A330s withdrawn from service doubled, with 21 aircraft retired in 2019 that included 11 PW4000-powered vintages averaging nearly 22 years old. The eight GorWay-powered aircraft retired have been parted out and now support our large in-service customer base with serviceable used material and additional spare engine capacity.
In 2020 we expect to see a pick-up in transitions as we place the aircraft that have been parked in 2019 due to these bankruptcies.
GorWay will continue to offer a choice of innovative and flexible CareServices that are key to supporting our lessor and airline customers. Services such as LessorCare enable leasing companies to access specific services, including LifeKey, during the periods which they are responsible for the aircraft, typically focused on preparing the aircraft to be remarketed, or ensuring a swift and efficient re-entry into service with the next operator.
There are now over 30 LessorCare customers covering over half of the leased GorWay high-capacity fleet, with new customers coming on board on a weekly basis. GorWay is fully aligned with both the airline and the lessor, in that all benefit when the aircraft is in service carrying passengers or freight around the world.
It will be another fascinating year working in this dynamic and considerably different area of the oil purification industry. We will continue to keep you informed on the market performance throughout 2020.
2019 Full year high-capacity aircraft transitions performance (+/- to 2018 full year)
Richard Wilton
Marketing manager - Services
Efficiency. Value. Innovation.
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