I think they are fine but by my measures the risk/reward is significantly worse compared to ASLE based on the financials unless you have an extremely above consensus bull case
Great Stuff! Great Read! Question for you as FTAI and other independent players scale their “module exchange” programs to capture a larger share of the $25 billion CFM56 aftermarket, how do the Original Equipment Manufacturers (OEMs) like GE and Safran typically respond? Is there a risk of the OEMs tightening the supply of life-limited parts (LLPs) to protect their own high-margin service revenue?
From my understanding the OEMs don't really cut off LLP supply they just defend margins by locking airlines into long-term service agreements and pushing pricing power versus shutting the market. So if they are essentially choosing to participate (not kill) the independent ecosystem then the risk is really margin pressure vs broader thesis breakage. This is because it’s still better for them to monetize third party activity and relieve capacity constraints than try to fully wall off a late-life, widely distributed engine base.
No SARO or ISSC?
I think they are fine but by my measures the risk/reward is significantly worse compared to ASLE based on the financials unless you have an extremely above consensus bull case
Great Stuff! Great Read! Question for you as FTAI and other independent players scale their “module exchange” programs to capture a larger share of the $25 billion CFM56 aftermarket, how do the Original Equipment Manufacturers (OEMs) like GE and Safran typically respond? Is there a risk of the OEMs tightening the supply of life-limited parts (LLPs) to protect their own high-margin service revenue?
From my understanding the OEMs don't really cut off LLP supply they just defend margins by locking airlines into long-term service agreements and pushing pricing power versus shutting the market. So if they are essentially choosing to participate (not kill) the independent ecosystem then the risk is really margin pressure vs broader thesis breakage. This is because it’s still better for them to monetize third party activity and relieve capacity constraints than try to fully wall off a late-life, widely distributed engine base.
Thank you for the knowledge!