Plane and engine makers in tug of war over future jet servicing profits

A new generation of aircraft is setting the stage for a “once-in-a-lifetime” battle over how future aviation service profits are divided, with plane makers seeking a larger share of engine makers’ lucrative aftermarket revenues. Speaking at the Farnborough Airshow near London on July 24, Airbus Commercial CEO Lars Wagner said the industry could rebalance the model over the “three to four decades of aftermarket.” Planemakers are typically paid for new jet deliveries, while engine makers often sell engines near or at a loss and then rely on high-margin repairs and services years later. Companies argue over who takes greater risk, including the role of fixed cost per flight hour arrangements that resemble insurance. With narrowbody replacements expected to ramp by around 2040, Airbus, Boeing, GE Aerospace and Pratt & Whitney are positioning their deals around how much cash should be shared upfront versus later.