AerSale Says Aging Fleets, Engine Shortages Keep Aviation Aftermarket Demand Strong

Key Points

• AerSale says aftermarket demand remains strong because aging fleets, solid passenger traffic, OEM delivery delays and engine shortages are keeping aircraft in service longer and driving maintenance needs.
• The company is benefiting from its integrated business model, which combines aircraft/engine trading and leasing, used serviceable material (USM), and MRO work, giving it flexibility to monetize aging assets in multiple ways.
• Management said AerSale is seeing stronger lease rates and USM sales, with more than $120 million in USM revenue last year, and is also using AI to improve asset valuation, pricing and operational planning.

AerSale NASDAQ: ASLE Chief Financial Officer Martin Garmendia said the aviation aftermarket remains supported by aging fleets, strong passenger demand and supply chain constraints that are extending the service lives of existing aircraft.

Speaking at Jefferies’ second annual MRO Summit, Garmendia described AerSale as operating at the intersection of three aftermarket businesses: trading and leasing mid-life aircraft and engines, tearing down assets for used serviceable material, or USM, and operating maintenance, repair and overhaul facilities.

“We do all that as one company, which gives us optionality that pure-play asset managers or pure-play MRO shops just don’t have,” Garmendia said.

AerSale Emphasizes Integrated Aftermarket Model

Garmendia said AerSale reports through two segments. Asset Management Solutions includes aircraft and engine trading, leasing and USM. The company typically acquires mid-life assets, often 12 to 15 years old, that have exited OEM maintenance or warranty periods. AerSale then decides whether to lease the asset, sell it whole or part it out.

The TechOps segment includes six MRO facilities: three on-airport heavy maintenance and modification sites in Goodyear, Arizona; Roswell, New Mexico; and Millington, Tennessee; and three component MRO locations, including two in Miami and a landing gear overhaul facility in Rio Rancho, New Mexico.

Garmendia said AerSale has “meaningful unused capacity” in its current footprint, allowing it to grow without significant new capital spending.

He said the company’s competitive position varies by segment, with AerSale competing against mid-life and end-of-life lessors, asset traders and parts providers in asset management, and against independent and OEM-affiliated MRO shops in TechOps. Its advantage, he said, comes from being able to evaluate an aging asset across multiple monetization paths.

Pricing and Demand Remain Strong

Garmendia said demand for assets and acquisitions remains “extremely strong,” citing OEM delivery delays, issues with geared turbofan engines and an aging global fleet. He said the market remains competitive, particularly for assets that can be put into operation easily.

On the MRO side, he pointed to limited airframe maintenance capacity and long engine repair lead times. AerSale benefits, he said, from inventory it has already purchased and from available MRO capacity.

Asked about fuel prices and potential airline demand weakness, Garmendia said AerSale has not yet seen a measurable impact on maintenance demand. He said aircraft can operate with lower load factors, but as long as they remain in service, they still require maintenance and engines.

“It really would have to be something that really goes through on a much longer term basis” before aircraft are grounded, placed into storage programs or retired, he said.

USM Inventory and Leasing Are Key Focus Areas

Garmendia said USM accounts for “a little over 50%” of AerSale’s Asset Management business. He said the company has increased inventory after having limited inventory two years ago, which has helped increase USM sales. He said USM revenue was more than $120 million last year.

USM parts typically offer operators a value proposition, often selling for 20% to 30% less than new parts, Garmendia said. He added that AerSale has also used some USM material to repair engines, particularly in the CFM56 market, when that provides a higher-return use of the inventory.

Garmendia said the company has been waiting for an increase in aircraft retirements, which would create more opportunities to buy assets for teardown. However, retirements have not increased as expected, including after COVID, due in part to OEM issues affecting aircraft and engines.

He identified 737 NG and A320ceo aircraft, along with CFM56 and V2500 engines, as platforms operators are likely to continue using because of their reliability and relatively low operating cost.

Lease rates have improved, particularly for engines, Garmendia said. He cited tight engine availability across mid-life and mature platforms, limited shop visit capacity, longer material lead times and issues with newer engines that are pulling spare capacity out of the market. AerSale has a little over 10 engines in repair and expects to place them into the market, he said.

GTF Issues Create Knock-On Demand

Garmendia said AerSale is not directly involved in geared turbofan engine leasing, but the GTF situation is affecting platforms the company serves. Operators dealing with aircraft on ground are looking for replacement capacity, increasing demand for V2500 and CFM56 engines, he said.

At AerSale’s Goodyear facility, Garmendia said some aircraft are awaiting engines, including aircraft connected to Spirit Airlines’ wind down. He said AerSale is working with leasing companies on storage maintenance programs and efforts to return aircraft to the market once engines are available or new lessees are secured.

TechOps Growth and AI Use

In TechOps, Garmendia said demand for heavy maintenance and modifications remains strong, supported by higher utilization, passenger demand and fleet age. He said AerSale’s Millington facility, which came online last year, has won an agreement with a domestic regional carrier for a full line maintenance program involving about three aircraft, bringing that facility to full capacity.

He also said AerSale’s landing gear facility has been awarded several contracts for this year, and its aerostructures facility recently opened after expanding capacity almost threefold.

On artificial intelligence, Garmendia said aviation is data-driven, especially regarding documentation and asset traceability. AerSale is using AI to analyze data for asset valuation, pricing and operational planning. He said the company has more than 15 years of data and is using AI to process it more efficiently and incorporate current market factors.

Garmendia said AI is currently focused more on the asset side, though AerSale is also exploring predictive maintenance and scheduling efficiencies in MRO. He said the company is unlikely to sell an AI product directly, but customers could benefit from more efficient processes.

Summarizing AerSale’s message to investors, Garmendia said aftermarket fundamentals remain strong, the company’s integrated model is its key differentiator, and AerSale is deliberately shifting its mix toward leasing, service and USM and away from opportunistic whole-asset sales to improve the consistency and visibility of earnings over time.

About AerSale NASDAQ: ASLE

AerSale Inc is an integrated aftermarket solutions provider serving the global commercial, defense and business aviation markets. The company specializes in aircraft and engine maintenance, repair and overhaul (MRO), asset leasing and aviation parts distribution. Its key offerings include airframe heavy maintenance, engine tear‐down and component overhaul, used serviceable material programs and end‐of‐life aircraft disassembly. Through these services, AerSale supports operators seeking to optimize fleet availability, extend asset life cycles and reduce maintenance costs.

Founded in 2009 and headquartered in Coral Gables, Florida, AerSale has grown through strategic acquisitions and organic expansion.

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