Learning as we grow
Two years ago, I took over responsibility for the V2500-A5 parts trading business at Rolls-Royce & Partners Finance (RRPF). Since then, the business has grown quickly and I have learnt a lot along the way.
My experience before parts had mainly been the structuring and selling of high value long term finance services for engines. These kinds of transactions are high value, low volume and almost always customised to the asset, customer and engine type. My assumption walking into the used parts market was that the business would be the opposite of this, namely, low value, high volume and very standardised. However every part has a story.
Every part has a story
A few parts have enjoyed a simple life flying with a single airline in easy-going regions like Europe. Most have had a more interesting life history, taking in different airlines, multiple thrust ratings, the occasional severe operation and several repairs. This makes the business interesting but also very challenging. The challenge is to make the complex as simple as possible.
The value proposition for buying serviceable used parts is simple and attractive. 70% or more of the cost of a major engine repair is material. Used parts are much cheaper than new parts and therefore will generate substantial cash savings. The use of recycled materials is also a very responsible way to reduce the environmental impact of old engines.
Increasing demand for used parts
The market has recognised this value proposition and demand for serviceable used material is growing. The V2500-A5 used material market is only really getting started with at least as many, if not more, shop visits to come as have been completed to date. There are approximately 6,500 engines in service and the majority have not reached their second shop visit yet.
RRPF is the engine leasing company with the largest portfolio of Trent and V2500-A5 engines. This broad portfolio means that we can confidently supply parts to our valued customers in both slow and busy markets.
Our parts business is growing significantly from a low base. We are seeing increasing demand and are working hard to meet and exceed our customer expectations. I am excited about the potential of the serviceable used parts market for our V2500-A5 and Trent 700 engines. Serviceable used material is now very much part of the story of RRPF. It is also an increasing part of my story.