1 / 36

Presented By: Shannon Ackert Vice President, Capital Markets November 10 th , 2010

Elements of Aircraft Maintenance Reserve Development. Maintenance Topics Conference. Presented By: Shannon Ackert Vice President, Capital Markets November 10 th , 2010. Elements of Aircraft Maintenance Reserve Development. Jackson Square Aviation, LLC Overview.

iolana
Download Presentation

Presented By: Shannon Ackert Vice President, Capital Markets November 10 th , 2010

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Elements of Aircraft Maintenance Reserve Development Maintenance Topics Conference Presented By: Shannon AckertVice President, Capital Markets November 10th, 2010 Boeing Maintenance Topics Conference, Miami, Fl November 10th, 2010

  2. Elements of Aircraft Maintenance Reserve Development Jackson Square Aviation, LLC Overview • Jackson Square Aviation is a global commercial aircraft lessor headquartered in San Francisco, California • Current satellite offices : London, Seattle, Miami & Buenos Aires. • Opening Asia office in 2010. • The company has a $500 million commitment from Oaktree • Capital, which has financed the management team since the • mid 1990’s with a high degree of success. • Jackson Square Aviation is focused on acquiring – primarily • through Sale & Leaseback (SLB) : • Narrowbody & widebody • Passenger & freighter Boeing Maintenance Topics Conference, Miami, Fl November 10th, 2010

  3. Elements of Aircraft Maintenance Reserve Development Agenda • Significant Maintenance Events • Maintenance Reserve Parameters • Maintenance Reserve Escalation • Maintenance Reserve Development • Appendix A – Maintenance Reserve - Information Resources • Appendix B – Maintenance Costs & Reserve Rates Boeing Maintenance Topics Conference, Miami, Fl November 10th, 2010

  4. Elements of Aircraft Maintenance Reserve Development 1.0 – Significant Maintenance Events Equipment Mtx Events Mtx Interval Process • Heavy Structural • Inspection (HSI) • C-Checks Hard-Time Airframe Condition-Monitored • APU Restoration • Landing Gear • Overhaul Components Hard-Time Condition-Monitored • Performance Rest • LLP Replacement Engine Hard-Time Boeing Maintenance Topics Conference, Miami, Fl November 10th, 2010

  5. Elements of Aircraft Maintenance Reserve Development 2.0 – Maintenance Reserve Parameters Reserve Equation Event Application Comments • Predictable, very little • variability in both costs • and time on-wing Fixed Cost Engine LLP Replacement Fixed FC Interval • Variability in costs, which • can be difficult to predict if • equipment is new or ageing Variable Cost Airframe HSI Landing Gear Ovhl Fixed Interval • Variability in both costs • and time on-wing • Often difficult to quantify if • equipment is new or ageing • Time on-wing heavily • influenced by operation Variable Cost Engine Module & APU Restoration Variable FH Interval Boeing Maintenance Topics Conference, Miami, Fl November 10th, 2010

  6. Elements of Aircraft Maintenance Reserve Development 3.0 – Maintenance Reserve Escalation • Annual Escalation Policies – Varies By Lessor, But Typically: • Fixed (i.e. 3%) • Indexed to Core Producer Price (CPI) Index • Computed Using OEM escalation formula – weighted using labor & material Indices (ECI – Labor & PPI - Material) ECI - Aircraft Mfg, Wages & Salaries PPI - Industrial Commodities Source : Boeing Boeing Maintenance Topics Conference, Miami, Fl November 10th, 2010

  7. Elements of Aircraft Maintenance Reserve Development 4.0 – Maintenance Reserve Development • Airframe Heavy Structural Inspection • Costs Factors • Airframe Age (First, Mature, & Ageing Runs) • Costs are escalated to account for • airframe ageing, which results in higher • non-routine tasks. • General “non-routine” factor • escalations: 10% - 15% per phase. • Flight Cycles • Cost may be increased to • account for high cycle operation. Aging > 15 Years Maturity 6 – 15 Yrs Non Routine Newness < 6 Years Non Routine Non Routine Routine Routine Routine Boeing Maintenance Topics Conference, Miami, Fl November 10th, 2010

  8. Elements of Aircraft Maintenance Reserve Development 4.0 – Maintenance Reserve Development • Airframe Heavy Structural Inspection • Costs Factors - continued • Scope of Work • Not driven by the aircraft operation, instead • Policy established by Lessor • Generally Falls Under Two Structures: • Structure A - Scope of work includes reimbursement for material and routine & non-routine labor for systems, structural & zonal tasks. • Structure B - Scope of work includes reimbursement for material and routine & non-routine labor for structural & zonal tasks. Boeing Maintenance Topics Conference, Miami, Fl November 10th, 2010

  9. Elements of Aircraft Maintenance Reserve Development 4.0 – Maintenance Reserve Development • Airframe Heavy Structural Inspection • Interval Factors • Two Types of Calendar Interval Structures: • Structure A : Calendar interval based off the OEM generic and/or • sample block program. • Example Generic Block : A320 / A330 Family : 4C/6Yr & 8C/12Yr Structural Inspection Checks @ 6 & 12 Yr Intervals, • Example Sample Block : 737NG Family : @ 8 Yr Intervals • Structure B : Calendar interval based on timing of majority of zonal / • structural tasks. Reflective of a customized maintenance program. • Example : 737NG Family – 8, 10, & 12 Year Intervals • Example : 747-8 Family – 8 Year Intervals Boeing Maintenance Topics Conference, Miami, Fl November 10th, 2010

  10. Elements of Aircraft Maintenance Reserve Development 4.0 – Maintenance Reserve Development • Airframe Heavy Structural Inspection • Example : A330-300 HSI Costs • Scope of work assumption: includes routine & non- • routine labor for systems, structural & zonal tasks, and material. • First-Run Phase - New - 6 Yr • 4C/6Yr SI Cost : $1.75M • 8C/6Yr SI Cost : $1.50M • Mature-Run Phase - 6 Yr - 12 Yr • 4C/6Yr SI Cost : $2.01M • 8C/6Yr SI Cost : $1.50M • Ageing-Run Phase - > 12 Yr • 4C/6Yr SI Cost : $2.20M • 8C/6Yr SI Cost : $1.65M 4C/6YR Check Escalated 15% off First-Run Costs Both 4C/6YR & 8C/12YR Checks Escalated 10% off Mature-Run Costs Boeing Maintenance Topics Conference, Miami, Fl November 10th, 2010

  11. Elements of Aircraft Maintenance Reserve Development 4.0 – Maintenance Reserve Development • Landing Gear Overhaul • Cost Factors - generally impacted by: • Supply & demand of exchange unit cost plus removal and • installation labor costs. • Interval Factors – generally consisting of two limiter: • Calendar time (i.e. 10 years) • Flight cycles (i.e. 20,000 flight cycles) • Timing of event: “whichever is more limiting”. Boeing Maintenance Topics Conference, Miami, Fl November 10th, 2010

  12. Elements of Aircraft Maintenance Reserve Development 4.0 – Maintenance Reserve Development • II. Landing Gear Overhaul • Notes: • In cases where there is a calendar limiter, this establishes • the minimum monthly rate required. • Some models have different limiters for main and nose gear assemblies. • Example : 737NG Landing Gear Reserve • Exchange Cost Assumption : $320,000 • Limiters: 10 Years / 18,000 FC Scenario 1 - Annual FC = 1,250 FC Cyclic limiter = 16 Yr(18,000/1,250) TOW Limiter = 10 Yr = 120 Mo Mo Rate :(320,000/ 120) = $ 2,666 Scenario 2 - Annual FC = 2,250 FC Cyclic limiter = 8 Yr (18,000/2,250) TOW Limiter = 8 Yr = 96 Mo Mo Rate: (320,000/ 96) = $ 3,333 Boeing Maintenance Topics Conference, Miami, Fl November 10th, 2010

  13. Elements of Aircraft Maintenance Reserve Development 4.0 – Maintenance Reserve Development • III. Auxiliary Power Unit (APU) Restoration • Cost Factors • Material driven – 70% - 80% of cost is material, • Minor variance between first & mature-run costs. • Scope of work : Rework of the power section, load impeller & gearbox modules according to OEM’s performance restoration and full gas path overhaul criteria. • Time On-Wing Factors • If new generation APU : • Use of empirical Mean-Time Between Unscheduled Removal (MTBUR) from similar in-production APU model. • If mature APU : • OEM Published Mean-Time Between Unscheduled Removal (MTBUR) Metrics. Boeing Maintenance Topics Conference, Miami, Fl November 10th, 2010

  14. Elements of Aircraft Maintenance Reserve Development 4.0 – Maintenance Reserve Development • III. Auxiliary Power Unit (APU) Restoration • Time On-Wing Factors – OEM MTBUR Metrics • Example : 737-800 APU (GTCP 131-9B) • MTBUR = 6,500 APU FH • Average Cost = $235,000 • APU Reserve Rate = $36 / APU FH 12-Mo Rolling Averages 6,450 FH - MTBCR 5,945 FH - MTBUR 5,495 FH - MTBR Mean-Time Between Removals Boeing Maintenance Topics Conference, Miami, Fl November 10th, 2010

  15. Elements of Aircraft Maintenance Reserve Development 4.0 – Maintenance Reserve Development IV. Engine Performance Restoration • Cost Factors I. Engine Build Goals - Tend be influenced by business decisions, and based on: • Maximizing usage of LLP hardware, which often leads to lower shop visit costs but higher DMC ($ / FH), or • Building for minimum number of shop visits, which allows one to achieve lower shop DMC ($ / FH) but higher shop visit costs. Notes • Many lessors are now imposing “minimum build goals” in their leases to prevent short building. Boeing Maintenance Topics Conference, Miami, Fl November 10th, 2010

  16. Elements of Aircraft Maintenance Reserve Development 4.0 – Maintenance Reserve Development IV. Engine Performance Restoration • Cost Factors Engine LLP Status @ EIS 30 20 20 25 Engine Build Goals – Example First Run TOW = 13,000 FC / 26,000 FH At Shop Visit : Maximizing usage of LLP hardware Minimize Number of Shop Visits 17 7 7 12 17 20 20 12 Replace No LLPs Build to 7,000 FC Replace Core LLPs Build to 10,000 FC Restoration $ 1,650,000 LLP Removed $ 0 --------------------------------------------------------- Total Shop Visit $ 1,650,000 Restoration $/FH 117.85 $/FH Restoration $ 1,800,000 LLP $ Removed $ 1,000,000 --------------------------------------------------------- Total Shop Visit $ 2,800,000 Restoration $/FH 90.00 $/FH Boeing Maintenance Topics Conference, Miami, Fl November 10th, 2010

  17. Elements of Aircraft Maintenance Reserve Development 4.0 – Maintenance Reserve Development IV. Engine Performance Restoration • Cost Influencing Factors – continued II. Age – rates reflective of first & mature-run status As Engine Ages 20,000 FH 16,000 FH 15,000 FH Hardware Deterioration Rate Increases 2nd SV 3rd SV 1st SV Higher Maintenance Costs Boeing Maintenance Topics Conference, Miami, Fl November 10th, 2010

  18. Elements of Aircraft Maintenance Reserve Development 4.0 – Maintenance Reserve Development IV. Engine Performance Restoration • Time On-Wing Factors • Engine Thrust Rating - Increasing Thrust > Higher EGT Deterioration > Lower Time On-Wing Same Engine Goes Into Shop EGT Limit EGT Limit EGT Margin Loss 8,000 FC 10,000 FC Time On-Wing High Thrust Time On-Wing Low Thrust Flight Cycles Flight Cycles Boeing Maintenance Topics Conference, Miami, Fl November 10th, 2010

  19. Elements of Aircraft Maintenance Reserve Development 4.0 – Maintenance Reserve Development IV. Engine Performance Restoration • Time On-Wing Factors - continued II. Engine Flight Leg Flight Profile = 1.0 Flight Hour per Flight Cycle Cruise Take-off & Climb Descent & Landing 1 FH 1 FH 1 FH Flight Profile = 3.0 Flight Hours per Flight Cycle Cruise Descent & Landing Take-off & Climb 3 FH Boeing Maintenance Topics Conference, Miami, Fl November 10th, 2010

  20. Elements of Aircraft Maintenance Reserve Development 4.0 – Maintenance Reserve Development IV. Engine Performance Restoration • Time On-Wing Factors - continued II. Engine Flight Leg Increasing Flight Leg Greater Flight Leg Lower DMC Cost $ / FH Lowers EGT Deterioration Higher Time On-Wing and Lower Cost $ / FH Flight Leg (Hours) Boeing Maintenance Topics Conference, Miami, Fl November 10th, 2010

  21. Elements of Aircraft Maintenance Reserve Development 4.0 – Maintenance Reserve Development IV. Engine Performance Restoration • Time On-Wing Factors - continued II. Engine Flight Leg – 777 Average Utilization Source : Boeing Cumulative Statistics Boeing Maintenance Topics Conference, Miami, Fl November 10th, 2010

  22. Elements of Aircraft Maintenance Reserve Development 4.0 – Maintenance Reserve Development IV. Engine Performance Restoration • Time On-Wing Factors - continued III. Engine Derate Increasing Derate Lowers Thrust and EGT Deterioration Cost $ / FH Increasing Derate = Lower Thrust 5% Derate 10% Derate 15% Derate Higher Time On-Wing and Lower Cost $ / FH Flight Leg (Hours) Boeing Maintenance Topics Conference, Miami, Fl November 10th, 2010

  23. Elements of Aircraft Maintenance Reserve Development 4.0 – Maintenance Reserve Development IV. Engine Performance Restoration • Time On-Wing Factors - continued • Environment - Engines operated in dusty, sandy and/or erosive-corrosive environments are exposed to higher blade distress and thus greater performance deterioration. Notes: • Lessors are now adjusting their reserve rates to account for region of operation. • Generally applies to narrow-body aircraft operating within distressed environments. Boeing Maintenance Topics Conference, Miami, Fl November 10th, 2010

  24. Elements of Aircraft Maintenance Reserve Development 4.0 – Maintenance Reserve Development IV. Engine Performance Restoration • Time On-Wing Factors - continued Engine - Environmental Distress Chart Lowest Medium / Low Medium High Highest Colors highlight severity and rate of occurrence of distress • Jackson Square Aviation 24 Boeing Maintenance Topics Conference, Miami, Fl November 10th, 2010

  25. Elements of Aircraft Maintenance Reserve Development 4.0 – Maintenance Reserve Development IV. Engine Performance Restoration • Example – Severity Curve 2.2 Base Flight Leg (2.0) Base Rate = $80 / FH 1.7 Severity Factor 5% Derate 1.0 10% Derate 15% Derate Flight Leg 1.0 1.5 2.0 2.5 3.0 5% Matrix = $194 $150 $88 $86 $84 10% Matrix = $176 $136 $80 $78 $76 15% Matrix = $158 $122 $72 $70 $68 Boeing Maintenance Topics Conference, Miami, Fl November 10th, 2010

  26. Elements of Aircraft Maintenance Reserve Development 4.0 – Maintenance Reserve Development IV. Engine Performance Restoration • Example – CFM56-7B26 Restoration Calculation Base Operation : 2.0 Flight Leg / 10% Derate / Temperate Region Base Rate : $80 / FH Operating Scenario 1: 1.5 FL / 10% Derate / Temperate FL Factor = 1.7 Derate Factor = 1.0 Region Factor = 1.0 Composite Factor = 1.7*1.0*1.0 Composite Factor = 1.70 Adjusted Rate = 80 *1.70 Adjusted Rate = $136 / FH Operating Scenario 2: 2.5 FL / 5% Derate / Hot-Dry FL Factor = 0.98 Derate Factor = 1.1 Region Factor = 1.2 Composite Factor = 0.98*1.1*1.2 Composite Factor = 1.30 Adjusted Rate = 80 *1.30 Adjusted Rate = $104 / FH Boeing Maintenance Topics Conference, Miami, Fl November 10th, 2010

  27. Elements of Aircraft Maintenance Reserve Development 4.0 – Maintenance Reserve Development V. Engine Life Limited Parts (LLP) Replacement • Cost Factors • OEM piece part escalation – currently averaging over 5% per year. • Inclusion of Static LLPs - Although these parts are not classified to be critical they do fall under the category of parts whose failure could create a hazard to the aircraft i.e. shrouds and frames. Boeing Maintenance Topics Conference, Miami, Fl November 10th, 2010

  28. Elements of Aircraft Maintenance Reserve Development 4.0 – Maintenance Reserve Development V. Engine Life Limited Parts (LLP) Replacement • Piece Part Life-Limit Factors • Life limits tend to range between 15,000 – 30,000 flight cycles, however • LLPs can have shorter lives imposed on them by airworthiness directives (ADs). • Lessor imposed stub factor on life limits – typically: • 10% for narrowbody engines • 5% for widebody engines • Some manufacturers certify ultimate lives of LLPs at the time they certify an engine model. Other manufacturers certify the lives as experience is accumulated. In these scenarios, ultimate lives are reached after one or several life extensions. Boeing Maintenance Topics Conference, Miami, Fl November 10th, 2010

  29. Elements of Aircraft Maintenance Reserve Development 4.0 – Maintenance Reserve Development V. Engine Life Limited Parts (LLP) Replacement • Stack Cost LLP FC Limit Cost $ $ / FC 10% Stub Lessors often assume that each LLP will retain 5% - 10% of its stub life before being replaced. 1 30,000 180,000 6.00 6.67 2 27,600 120,000 4.35 4.83 3 30,000 100,000 3.33 3.70 4 20,000 50,000 2.50 2.78 5 20,000 80,000 4.00 4.44 6 20,000 110,000 5.50 6.11 7 20,000 30,000 1.50 1.67 10% Stub = Cost $ / (90% * FC Limit) 8 20,000 240,000 12.00 13.33 9 20,000 200,000 10.00 11.11 19 20,000 180,000 9.00 10.00 11 20,000 90,000 4.50 5.00 12 20,000 60,000 3.00 3.33 13 25,000 100,000 4.00 4.44 14 25,000 150,000 6.00 6.67 15 25,000 70,000 2.80 3.11 16 25,000 90,000 3.60 4.00 17 25,000 80,000 3.20 3.56 18 25,000 70,000 2.80 3.11 2,000,000 88.00 98.00 Boeing Maintenance Topics Conference, Miami, Fl November 10th, 2010

  30. Elements of Aircraft Maintenance Reserve Development 4.0 – Maintenance Reserve Development • VI. Lessor’s Perspective: • Many lessors base their costs to be reflective of • costs negotiated from either a U.S. or European based MRO facility. • Consequently,their reserves rates are normally ranked as “market-based to above market-based”. • Ultimately, reserves are heavily negotiated and are often “marketing” driven. Boeing Maintenance Topics Conference, Miami, Fl November 10th, 2010

  31. Elements of Aircraft Maintenance Reserve Development Appendix A – Sources of Maintenance Reserve Metrics Maintenance Reserve Claims – Example Performance Restoration Boeing Maintenance Topics Conference, Miami, Fl November 10th, 2010

  32. Elements of Aircraft Maintenance Reserve Development Appendix A – Sources of Maintenance Reserve Metrics 2. OEM Conferences & Publications 3. Commercial Publications Boeing Maintenance Topics Conference, Miami, Fl November 10th, 2010

  33. Elements of Aircraft Maintenance Reserve Development Appendix B - Maintenance Costs & Reserve Rates • 1.0 Airframe Heavy Structural Inspection Costs & Reserve Rates • Assumes full workscope (systems, structures & zonal & material) Boeing Maintenance Topics Conference, Miami, Fl November 10th, 2010

  34. Elements of Aircraft Maintenance Reserve Development Appendix B - Maintenance Costs & Reserve Rates • 2.0 Engine Performance Restoration Costs & Reserve Rates Boeing Maintenance Topics Conference, Miami, Fl November 10th, 2010

  35. Elements of Aircraft Maintenance Reserve Development Appendix B - Maintenance Costs & Reserve Rates • 3.0 Landing Gear Overhaul Costs & Reserve Rates • Assumes cost for exchange unit plus removal/installation labor Boeing Maintenance Topics Conference, Miami, Fl November 10th, 2010

  36. Elements of Aircraft Maintenance Reserve Development Appendix B - Maintenance Costs & Reserve Rates • 4.0 APU Performance Restoration Costs & Reserve Rates Boeing Maintenance Topics Conference, Miami, Fl November 10th, 2010

More Related