Engine Values Rise on Supply Constraints: Cirium Interview with Al Wood

DUBLIN – February 2024 – Against the backdrop of this year’s Airline Economics Growth Frontiers Dublin conference, Cirium’s Oliver Clark spoke with Al Wood, Aquila Air Capital’s Chief Executive Officer, about his personal perspective on how the market dynamics in the engine leasing business had shifted in recent times.


[…] Aquila Air Capital chief executive Al Wood tells Cirium that the lack of supply is driving pricing for serviceable engines.

The company’s portfolio consists of a combination of spare engines and aircraft on lease across the world. Aquila typically focuses on older engines, such as the GE Aerospace CF6, PW4000 and PW2000.

Wood says that since 2021 owners of certain engine types can expect a premium somewhere north of a 30% on pricing increases from 2021 to today.

“We don’t always like to admit it, but a 20-year old aeroplane is a really large engine stand, all the value is in the engines. So, you have to be a very engine savvy investor to do well on that side of the market.

“I can lease the two engines off the aeroplane for more than I can lease the whole aeroplane for today.”

Woods partnered with $85 billion private equity fund Warburg Pincus to launch Aquila in 2021. The initial investment thesis at the time was focused on pricing dislocation amid Covid.

“Especially on the back-end of the market, there was a lot of available material, there is a lot available aircraft, lots of spare engines, etc. and we could take those fleets, buy them at scale, and repurpose them really for the emerging freighter market.”


Aquila’s Wood says that complexities of the engine MRO market – be it related to labour, parts supply and “unprecedented price increases that we’ve seen on piece parts” – are making serviceable engines more attractive.

“The largest leading indicator for my business is MRO. So, if something goes wrong in the engine MRO world, that’s when people call us for spare engines.

“Right now, we get 50 calls a day, and our portfolio is at 100% utilisation. Having done this for 30 years, there is not a lot of times I could say my portfolio was at 100% utilisation.

“Previously when we bought an engine it would have taken me 90 days to place that engine with a good credit. I’ve got a contracted lease on it before I buy it in today’s world. So, it’s got a home the day it shows up on our dock.”

Wood notes that many skilled employees left the OEMs and MRO shops amid Covid and because many have not returned “tribal knowledge has left our industry.

“You are talking about an incredibly skilled labour force that those folks have to rebuild. And that’s not a small task. So, when you look at all that perfect storm, no question demand is high, no question pricings [are] the highest I’ve ever seen in my career, I do not see a material change downward. For a number of years, this is not a problem that will fix itself in 12 months,” he says, adding: “it’s just math.”

“The engine OEMs will always have an incentive to maintain their own products. They all have that capability. Frankly, they’re very good at it, especially for that first 10-year teething period.

“There is airworthiness bulletins, there’s upgrades, there’s always the teething processes of a new engine. And whether it’s Rolls-Royce, GE, Pratt, CFMI, they are all incentivised to keep that business as long as they can. I don’t see that as a major inhibitor to supply in the space, though, we have them calling us for spare engines just as much as we do the airlines. Everyone is in need of thrust in today’s world.” […]

Read the full story on Cirium

About Aquila Air Capital

Founded in 2021, Aquila Air Capital (“Aquila”) is a specialty finance platform focused on providing aviation asset financing, as well as purchasing and leasing aircraft and engines. Led by a management team with decades of experience in the aerospace and aviation industries, Aquila is a trusted partner to all players in the value chain, from buyers and sellers of assets to operators in need of creative and timely solutions for their critical business needs. www.AquilaAirCapital.com