Perspectives on Aircraft
Value, Risk & Markets

Every aircraft has a market value. Very few aircraft can realise it.

Market value describes a theoretical transaction — willing parties, assumed conditions, clean documentation. Real transactions are different. They happen under time pressure, with incomplete records, maintenance exposure that wasn't in the model, and transition costs nobody budgeted for.

I have seen deals where two aircraft with identical market values behaved completely differently at closing. One had clean back-to-birth LLP documentation, a recent C-check, and a lessor who understood what they owned. The other had a records gap on an engine LLP, an undocumented structural repair, and maintenance reserves that didn't reflect actual costs. Same market value on paper. Roughly $600,000 difference in realisable value by the time both deals closed.

The questions that matter are not "what is this aircraft worth?" They are: can the records support the value? What does maintenance positioning actually cost to correct? What will a transition realistically take — in time, money, and friction? And under these specific conditions, what can actually be realised?

Market value is where the conversation starts. Realisable value is where it ends. The distance between them is what independent technical advisory exists to measure.

Aircraft acquisitions get evaluated at signing. The real test comes during transition.

I have been on-site during transitions where everything looked fine in the data room and the first physical inspection surfaced an undocumented repair on the keel beam. Where records showed a C-check completed but the work packs told a different story. Where the MRO needed another three weeks and the delivery window had already been sold to the next operator.

These are not edge cases. They are routine. The reason is structural: responsibility during a transition is fragmented across the airline, the lessor, the MRO, the authority, and sometimes a ferry operator — each with different incentives and different definitions of "done." Without someone coordinating across all of them with the technical authority to call a problem a problem, issues stay unresolved until they become expensive.

Timing matters more than most models assume. A three-week MRO delay on a narrow-body can cost more in lost revenue, continued lease payments, and repositioning than the original maintenance event. Small discrepancies — a configuration difference, a missing certificate, an open deferred defect — become significant commercial issues the moment a closing date is attached to them.

The value of getting a transition right is not just avoiding costs. It is capturing the value you underwrote when you decided to buy. Transitions are where assumptions meet reality. The outcome depends almost entirely on how well you manage that meeting.

Q: We commissioned a pre-purchase inspection from a firm recommended by our broker. Can we rely on it?

Possibly. But the recommendation source matters. A firm introduced by the selling broker, the lessor, or the MRO performing the maintenance has a structural conflict — even if everyone behaves professionally. Their next engagement may depend on the same relationship you are hoping they will challenge.

True independence means the inspector has no commercial relationship with any party to the transaction, is paid only by the buyer, and has no reason to soften a finding to preserve a future mandate.

In practice, I would ask three questions: Who introduced them? Have they worked with the seller or MRO before? And are they willing to put a finding in writing that could kill the deal? If the answer to the last question is hesitation, the independence is already compromised.

An inspection that finds nothing on a 15-year-old aircraft is not a clean bill of health. It is a question about the inspector.

At ISTAT Americas in San Diego this year, the supply chain panel surfaced a number quietly familiar to insiders but rarely stated this plainly: major aircraft OEMs are paying their suppliers on 120-day terms. The cross-industry average for manufacturing is 40 to 50 days. That is a 70-to-80-day gap during which suppliers — many of them small, specialised, and capital-constrained — are effectively extending working capital to companies worth hundreds of billions of dollars.

The consequences are not abstract. Suppliers operating on stretched receivables carry higher financing costs, reduce investment in capacity, and — when rates rise sharply as they did in 2022 and 2023 — make rational decisions to slow down, defer hiring, or exit product lines entirely. This is not a complaint about corporate behaviour. It is a description of cause and effect.

The downstream result is the supply chain crisis that has defined aviation since 2022: parts lead times measured in months rather than weeks, MRO slots delayed by material unavailability, new aircraft deliveries slipping repeatedly not because of production line failures but because of a tier-two supplier unable to deliver a casting or a harness on time.

Airlines and lessors have largely absorbed this as a market condition. It is worth recognising it for what it also is: a structural funding arrangement that transfers financial risk down the supply chain and ultimately prices it into every lease rate, every MRO invoice, and every aircraft delivery slot. The OEMs set the terms. The rest of the industry pays them.

The shift from CFM56 and V2500 to LEAP and GTF has been well documented in terms of fuel efficiency. What gets less attention is what it has done to spare engine requirements.

On earlier engine generations, operators typically planned for spare ratios below 10% — roughly one spare engine for every ten in operation. The engines were mature, shop visits were predictable, and the MRO network was well-calibrated to the workload. New-generation engines are running at 15–20% spare ratios. That figure emerged from the ISTAT Americas supply chain panel in San Diego, and it tracks with what operators have been navigating operationally since the GTF issues began materialising at scale.

The reasons are structural rather than incidental. New engine platforms have longer initial shop visit intervals but when they do go in for maintenance, the events are longer and more complex. The GTF, in particular, has had well-publicised issues with powder metal components requiring accelerated inspection and removal. MRO capacity for the new platforms has not scaled at the same rate as the fleet. And the pool of available spare engines — which takes years to build — remains undersized relative to in-service numbers.

For fleet financiers, lessors, and airlines doing capacity planning, a doubling of the effective spare engine ratio has significant balance sheet implications. Engine leasing rates have reflected this in part. But the full cost — in AOG days, wet lease exposure, and schedule disruption — is harder to model and rarely appears in a base case. It is the kind of technical reality that changes the economics of a fleet plan without ever appearing explicitly in the model.