MRO & Manufacturing
Strategic Aircraft Teardowns Address Aviation Supply Chain Challenges
Supply constraints push airlines to use strategic teardowns, unlocking value from mid-life aircraft and boosting the USM market for certified parts.
Navigating Aviation’s Supply Chain Storm: The Rise of Strategic Teardowns
The global aviation industry is currently navigating a period of significant turbulence, not from weather, but from a complex and constrained Supply-Chain. A confluence of factors, including production delays from major manufacturers and specific technical issues with critical components like engines, has created a bottleneck. This situation is forcing airlines to adapt in ways that challenge traditional operational models. With fewer new aircraft rolling off the assembly line, existing fleets are being kept in service for longer than originally planned, creating an unprecedented demand for maintenance, repair, and overhaul (MRO) services.
This heightened demand for MRO has, in turn, ignited a voracious appetite for spare parts. The challenge, however, is that the same supply chain issues affecting new aircraft production also impact the availability of new components. In response to this environment, a pragmatic and innovative solution has gained prominence: the strategic teardown of aircraft. Once viewed as a final step at the end of an aircraft’s life, disassembly is now being employed as a proactive strategy for mid-life aircraft to harvest high-value, certified components and inject much-needed liquidity into the parts market.
This shift represents more than just a temporary fix; it signals a fundamental change in asset management within the aviation sector. Aircraft owners and lessors are “using the difficulty,” as AerFin CEO Simon Goodson puts it, to unlock the latent value in their fleets. By strategically dismantling aircraft, they are not only addressing the immediate parts shortage but also fostering a more sustainable, circular economy. This approach provides a steady stream of Used Serviceable Material (USM), offering Airlines a cost-effective and reliable alternative to waiting for new OEM parts.
The Anatomy of the Supply Chain Crisis
The current strain on the aviation supply chain is not the result of a single point of failure but rather a series of interconnected challenges. At the forefront are the production and delivery delays from the industry’s primary airframers, Boeing and Airbus. Both manufacturers have faced hurdles, from heightened regulatory scrutiny and quality control enhancements to broader logistical bottlenecks that have slowed the pace of new aircraft entering the global fleet. This slowdown has a direct and immediate ripple effect across the entire industry.
OEM Production Headwinds
When airlines cannot receive new, fuel-efficient aircraft on schedule, they are left with little choice but to extend the operational life of their existing, often older, fleets. This decision is not without consequences. Older aircraft naturally require more intensive maintenance schedules and more frequent component replacements to ensure they remain airworthy and reliable. This dynamic has led to a significant surge in demand for MRO services worldwide.
The increased need for maintenance creates a secondary demand shock for the very parts that are already in short supply. Airlines and MRO providers find themselves competing for a limited inventory of components, which drives up costs and extends aircraft downtime. This cycle puts immense pressure on airline operations, affecting everything from flight schedules to long-term fleet planning. The inability to source parts efficiently becomes a critical barrier to maintaining service levels and managing operational costs.
This environment has forced the industry to look inward for solutions. The focus has shifted from a linear model of “build, fly, retire” to a more circular one where existing assets are re-evaluated for their component value long before they reach their structural limits. The aircraft itself becomes a repository of high-value, in-demand parts that can be harvested to keep other planes flying.
The Engine Dilemma
Compounding the broader manufacturing delays is a specific and acute issue within the engine sector. Manufacturing defects discovered in Pratt & Whitney PW1100G turbofan engines, which power a significant portion of the global Airbus A320neo family fleet, have led to the grounding of hundreds of aircraft. These aircraft require extensive inspections and retrofits, a process that removes them from service for extended periods and places enormous strain on the market for spare engines and related components.
The engine is the most complex and valuable part of an aircraft, and a shortage in this area has profound implications. The demand for serviceable engines and their constituent parts has skyrocketed, making them prime targets for recovery through teardowns. When an A320neo or similar mid-life aircraft is dismantled, its engines and other high-tech components are often the first to be harvested and returned to service.
This specific crisis highlights the vulnerability of a highly concentrated supply chain. It underscores the need for alternative parts sources that can act as a buffer against OEM production issues. The strategic teardown market has stepped in to fill this role, providing a critical lifeline of certified, flight-ready components that help mitigate the impact of these groundings and keep the global fleet operational.
Teardowns as a Strategic Imperative
The narrative surrounding aircraft teardowns has undergone a complete transformation. What was once a somber, end-of-life process for aging airframes is now a dynamic and strategic financial tool. Aircraft owners are no longer waiting for a weak market to retire assets; instead, they are proactively selecting mid-life aircraft for disassembly to capitalize on the high demand for USM. This calculated approach is reshaping the aviation aftermarket and redefining how asset value is perceived and managed.
The increased pace of mid-life aircraft teardowns is a direct consequence of constrained supply chains and pressure on OEMs. This strategy allows owners to “use the difficulty” to their advantage by extracting maximum value from their assets.
The Economics of Used Serviceable Material (USM)
USM is the lifeblood of this new strategy. These are not simply “used parts” but components that have been carefully removed, inspected, repaired if necessary, and recertified to meet the stringent safety and quality standards of aviation authorities. For airlines, USM offers a compelling value proposition: significant cost savings compared to new OEM parts without compromising on safety or reliability. A single aircraft teardown can yield approximately 1,400 high-quality, certified parts, injecting a substantial volume of inventory into the market.
The financial logic is backed by strong market growth. The global market for air transport USM was valued at $7.1 billion in 2023 and is projected to expand to $10.37 billion by 2032. This growth is fueled by the aging global fleet and the ongoing supply chain constraints, making USM an increasingly integral part of the MRO landscape. For aircraft lessors and owners, this provides a powerful way to generate returns from assets that might otherwise be underutilized or waiting for a lease placement.
By dismantling an aircraft, an owner can often generate more immediate revenue from the sum of its parts than from leasing or selling the aircraft whole, especially in a volatile market. This financial maneuver turns a physical asset into a liquid source of in-demand inventory, directly addressing the market’s most pressing needs while optimizing the owner’s portfolio.
Sustainability and Digital Transformation
Beyond the economic benefits, the rise of strategic teardowns aligns with the industry’s growing focus on Sustainability. This practice is a core component of the circular economy in aviation. By harvesting and reusing serviceable parts, the industry reduces its reliance on new manufacturing, which in turn lowers energy consumption, raw material extraction, and overall carbon emissions. It is a practical application of “reduce, reuse, recycle” principles in a high-tech industry.
This evolution is being accelerated by technology. The USM market is becoming increasingly digitalized, with online marketplaces providing real-time access to certified parts and improving transparency for buyers. Furthermore, advanced digital lifecycle tracking software is being deployed to ensure the full provenance of every component. This technology provides a verifiable digital record of a part’s history, from its original installation to its removal, inspection, and recertification, bolstering confidence and safety.
This combination of a circular economic model and digital oversight is creating a more resilient, efficient, and transparent aftermarket. It demonstrates how the aviation industry is adapting to modern challenges by leveraging both innovative business strategies and cutting-edge technology to build a more sustainable and robust operational foundation.
Conclusion: A New Flight Path for Aviation Assets
The convergence of OEM production delays and surging MRO demand has catalyzed a profound shift in the aviation aftermarket. Strategic aircraft teardowns have evolved from a niche, end-of-life activity into a mainstream, sophisticated strategy for asset management. This approach directly confronts the industry’s supply chain vulnerabilities by creating an alternative source of high-quality, certified parts. It allows aircraft owners to unlock immediate value from their assets while providing airlines with a crucial, cost-effective solution to keep their fleets flying.
Looking forward, this trend is poised to become a permanent feature of the aviation landscape. It represents a move toward a more circular and resilient economic model, where the value of an aircraft is measured not just by its operational life but by the continued utility of its components. As technology further enhances the transparency and efficiency of the USM market, strategic teardowns will play an even more critical role in ensuring the stability and sustainability of the global aviation industry, proving that even in times of difficulty, there are opportunities for innovation and growth.
FAQ
Question: What is a strategic aircraft teardown?
Answer: It is the process of dismantling a mid-life aircraft, which is still viable for flight, specifically to harvest its high-demand components. This differs from a traditional teardown, which is typically performed on an aircraft that has reached the absolute end of its operational life.
Question: Why is there a shortage of new aircraft parts?
Answer: The shortage is primarily due to production and delivery delays from major manufacturers like Boeing and Airbus, which are facing regulatory hurdles and supply chain bottlenecks. This is compounded by specific manufacturing issues with critical components, such as certain jet engines, which has increased demand for replacements.
Question: What is USM?
Answer: USM stands for Used Serviceable Material. It refers to parts and components harvested from dismantled aircraft that have been rigorously inspected, certified, and documented to meet strict aviation safety standards. USM offers a reliable and cost-effective alternative to new OEM parts.
Question: Is it safe to use parts from dismantled aircraft?
Answer: Yes. The aviation industry operates under extremely strict safety regulations. All USM must go through a thorough process of inspection, testing, and recertification by authorized maintenance organizations to ensure it is airworthy. Digital tracking also helps maintain a clear history of each part’s lifecycle.
Sources
Photo Credit: AerFin
MRO & Manufacturing
ITOCHU Acquires Stake in IAG Engine Tech MRO Venture
ITOCHU Corporation takes a minority stake in Madrid-based IAG Engine Tech, one of eight CFM LEAP Premier MRO licensees worldwide.
Japanese conglomerate ITOCHU Corporation has agreed to acquire a minority stake in IAG Engine Tech, a newly established engine maintenance, repair, and overhaul (MRO) company based in Madrid, Spain.
Announced in a joint press release on October 28, 2026, the transaction marks ITOCHU’s first direct entry into the narrow-body aircraft engine maintenance market. The agreement provides IAG Engine Tech with capital and international reach to expand its third-party customer base as it prepares to service next-generation powerplants, while International Airlines Group (IAG) will retain a majority stake through its Spanish carrier, Iberia.
Transitioning operations at La Muñoza
IAG Engine Tech was established in 2026 to consolidate and expand the engine maintenance capabilities of IAG airlines, which include Iberia, British Airways, Aer Lingus, Vueling, and LEVEL. The new entity will operate out of the existing La Muñoza facility in Madrid, assuming the engine work previously handled directly by Iberia Maintenance.
Iberia Maintenance brings over 50 years of engine servicing expertise to the new joint venture. The facility currently holds capabilities for legacy narrow-body powerplants, including the International Aero Engines V2500 and the CFM International CFM56, as well as the new-generation Pratt & Whitney PW1100G-JM geared turbofan (GTF).
Marco Sansavini, President and CEO of Iberia, outlined the strategic rationale behind bringing in an external partner to scale the operation.
“This project is part of the transformation of our maintenance business and the long-term commitment outlined in the Flight Plan 2030. The addition of ITOCHU allows us to bring on board a partner with experience, investment capacity, and a strong international presence. Their support will be crucial in developing the potential of IAG Engine Tech and strengthening our activity in a market with significant growth prospects.”
Securing capacity in the CFM LEAP market
A central driver of the new partnership is the upcoming introduction of CFM International LEAP engine maintenance capabilities. In April 2026, IAG secured the CFM LEAP Premier MRO license, positioning IAG Engine Tech to service the powerplant that drives the Airbus A320neo and Boeing 737 MAX families.
According to reporting by Aviation Week, only eight MRO providers worldwide are currently authorized to maintain CFM LEAP engines under the Premier license. This exclusivity places IAG Engine Tech in a strong position to capture third-party work outside the IAG fleet.
The market for narrow-body engine maintenance is expanding rapidly as operators worldwide accelerate the introduction of short- and medium-haul aircraft. TRAICY Global reports that LEAP engines are projected to account for approximately 70 percent of the single-aisle aircraft market by 2035, ensuring long-term demand for certified maintenance facilities.
Operations at IAG Engine Tech, including the expanded LEAP capabilities, are scheduled to officially begin in early 2027. This timeline coincides with the expected finalization of the ITOCHU equity acquisition, which remains subject to standard regulatory approvals and consents.
ITOCHU builds an integrated aviation aftermarket portfolio
The minority stake in IAG Engine Tech represents a strategic expansion for ITOCHU Corporation, a Tokyo-headquartered conglomerate with approximately 90 offices across 60 countries. While this is the company’s first venture into narrow-body engine MRO, ITOCHU already maintains an established commercial relationship with Iberia and IAG through its aircraft leasing operations.
The investment follows a series of targeted acquisitions designed to build a comprehensive aviation aftermarket and leasing portfolio. In August 2026, ITOCHU acquired a 50 percent equity interest in TC Skyward Aviation U.S., a joint venture managed with Tokyo Century, significantly expanding its footprint in the North American aircraft leasing sector.
Prior to the leasing expansion, ITOCHU invested in Ireland-based Killick Aerospace in 2024. That transaction allowed the Japanese trading house to scale its presence in the used aircraft parts market and original equipment manufacturer (OEM) distribution businesses. By adding direct MRO capabilities through IAG Engine Tech, ITOCHU is creating a vertically integrated aviation services network that spans leasing, parts distribution, and heavy engine maintenance.
AirPro News analysis
We view this transaction as a highly pragmatic move for both parties in a constrained supply chain environment. The global narrow-body engine MRO market is currently facing severe capacity shortages, driven by extended time-on-wing issues with new-generation engines and a lack of available maintenance slots. By partnering with a well-capitalized trading house like ITOCHU, IAG is positioning its in-house maintenance arm to compete aggressively for high-margin third-party work, rather than operating solely as a cost center for its own airline brands.
For ITOCHU, securing a foothold in a licensed LEAP MRO provider offers a lucrative revenue stream that directly complements its existing aircraft leasing and parts distribution portfolios. Access to one of only eight CFM LEAP Premier MRO licenses worldwide gives the Japanese conglomerate a rare and valuable asset in the aerospace aftermarket, allowing it to offer integrated leasing and maintenance packages to airline customers globally.
Photo Credit: Iberia
MRO & Manufacturing
Embraer Names FL Technics Authorized Service Center for E-Jets
Embraer designates FL Technics as an Authorized Service Center for E170 and E190 jets at facilities in Lithuania.
Embraer has designated FL Technics as an Authorized Service Center for its E170 and E190 commercial jets, expanding the manufacturer’s maintenance, repair, and overhaul network in Eastern Europe.
The authorization, announced in a press release on October 29, 2026, covers FL Technics’ facilities in Vilnius and Kaunas, Lithuania. The partnership aims to provide regional E-Jet operators with increased access to certified support solutions as Embraer continues to grow its global services portfolio.
Expanding European maintenance capabilities
The new Embraer Authorized Service Center (EASC) status allows FL Technics to perform approved maintenance on the E170 and E190 variants of the E-Jet family. The authorization formally integrates the Lithuanian provider into Embraer’s global support network, ensuring that maintenance procedures meet the original equipment manufacturer’s specifications.
Frank Stevens, Vice President of Global MRO Centers of Embraer Services & Support, stated that the addition of FL Technics will directly benefit regional operators by increasing the availability of certified maintenance slots in the European market.
“Their proven maintenance capabilities and growing presence across Europe will provide E-Jet operators with greater access to high-quality support solutions. This partnership reinforces our commitment to delivering the best customer experience and ensuring our customers can operate with confidence wherever they fly.”
Saulius Bajarunas, CEO of FL Technics, noted that the authorization serves as a strong validation of the company’s technical capabilities, quality standards, and customer-focused service model. He added that the firm looks forward to supporting Embraer operators with reliable and efficient maintenance, repair, and overhaul (MRO) services from its global network.
Building on existing line maintenance operations
The EASC designation builds on an established operational relationship between the two companies. FL Technics initially launched line maintenance services for Embraer aircraft in 2023. Since that initial launch, the maintenance provider has built a robust operational footprint for Embraer support across the continent.
FL Technics currently delivers line maintenance across several key European stations. These include Vilnius (VNO) and Palanga (PLQ) in Lithuania, Bucharest (OTP) and Cluj-Napoca (CLJ) in Romania, and multiple Norwegian airports including Bergen (BGO), Oslo (OSL), Trondheim (TRD), Bodø (BOO), and Ålesund (AES). The new authorization officially expands its capabilities to include heavier maintenance tasks for the E170 and E190 aircraft at its primary Lithuanian bases.
The company is a leading global provider of aircraft MRO solutions, employing over 4,000 aviation professionals. FL Technics operates MRO hangars in Lithuania, the United Kingdom, Indonesia, and the Dominican Republic. The Embraer authorization follows other recent regulatory approvals for the company’s expanding global footprint. On October 28, 2026, FL Technics Indonesia secured EASA Part-145 certification for its Bali facility, covering Airbus A320 and Boeing 737 maintenance.
Embraer’s aftermarket growth strategy
The expansion of the EASC network in Europe aligns with Embraer’s broader commercial momentum and its strategic focus on aftermarket revenue. Embraer is a leading manufacturer of commercial jets up to 150 seats and the main exporter of high value-added goods in Brazil, maintaining industrial units, offices, service centers, and parts distribution facilities across the Americas, Africa, Asia, and Europe.
On October 27, 2026, Embraer reported a record third-quarter firm order backlog of US$35.7 billion, representing a 14 percent year-over-year increase across all four of its business units.
The manufacturer’s services and support division has been a significant driver of this corporate growth. The services backlog recently reached a record US$5.6 billion. This figure was bolstered by recent contract renewals, including an October 28, 2026, agreement with Alliance Airlines to provide component support for 40 Embraer E190s.
AirPro News analysis
We view Embraer’s decision to authorize FL Technics for E170 and E190 maintenance as a necessary step to support the aging first-generation E-Jet fleet in Europe. As these aircraft transition to secondary operators or require heavier, more complex maintenance checks, the manufacturer must ensure sufficient regional MRO capacity exists to keep the fleet flying efficiently. By leveraging established third-party providers like FL Technics, Embraer can maintain high service levels and capture aftermarket value without the capital expenditure required to build new, wholly owned facilities.
This strategy also frees up Embraer’s internal resources to focus on production and entry-into-service support for the newer E2 family. For FL Technics, securing OEM authorization from Embraer diversifies its service portfolio beyond the Airbus and Boeing narrowbodies that traditionally dominate independent MRO hangars, positioning the company to capture a larger share of the regional aviation aftermarket.
Photo Credit: Embraer
MRO & Manufacturing
MTU Maintenance Signs 10-Year LEAP Engine MRO Deal
MTU Maintenance and Patriot Dynamics finalize a 10-year LEAP-1A and LEAP-1B MRO agreement anchored at MTU’s new Fort Worth facility.
MTU Maintenance and Miami-based aviation lessor Patriot Dynamics have finalized a 10-year maintenance, repair, and overhaul (MRO) agreement for CFM International LEAP-1A and LEAP-1B engines. The contract, announced on October 28, 2026, secures long-term aftermarket support for the lessor’s growing engine portfolio and provides a baseline of work for MTU’s newly opened facility in Fort Worth, Texas.
In a press release issued by MTU Aero Engines, the German manufacturer confirmed the agreement covers both comprehensive MRO services and on-site support. The deal aligns with Patriot Dynamics’ strategy to build a dedicated LEAP engine leasing platform as the global fleet of Airbus A320neo and Boeing 737 MAX aircraft matures.
Expanding operations in Fort Worth
The maintenance work for Patriot Dynamics will be executed at the MTU Maintenance facility located at Perot Field Fort Worth Alliance Airport (AFW). The site officially opened on July 8, 2026, following a $120 million investment by MTU to establish a premier MRO center for LEAP engine services in North America.
MTU reports the production and support space covers approximately 430,000 square feet, though local Texas business filings and industry reports have cited the footprint at up to 462,000 square feet. The facility features dedicated engine testing capabilities, including a 100,000-pound-thrust test cell. Once fully operational, MTU plans to overhaul up to 240 engines annually at the Texas location.
Martin Friis-Petersen, Senior Vice President of MRO Programs at MTU Aero Engines, stated that securing the long-term agreement demonstrates customer confidence and provides a strong foundation for the further development of operations at the Fort Worth site.
Patriot Dynamics builds its LEAP portfolio
Patriot Dynamics specializes in commercial aviation asset trading and leasing, focusing on engines, landing gear, and auxiliary power units (APUs). The 10-year MRO contract directly supports the firm’s recent fleet expansion. On October 29, 2026, the lessor announced an agreement to purchase six spare engines directly from CFM International, split evenly between LEAP-1A and LEAP-1B models.
This direct purchase marks a shift in the lessor’s acquisition strategy and feeds directly into the new maintenance pipeline with MTU. Patriot Dynamics is also exploring further leasing and asset management provisions through MTU Maintenance Lease Services.
Partnering with MTU is an important step as we build our LEAP engine platform. Their technical expertise and comprehensive support capabilities will help us deliver reliable engine solutions for our customers while protecting the long-term value of our assets.
The quote, provided in the MTU press release by Patriot Dynamics Principal Michael Sheldon, highlights the lessor’s focus on asset preservation. David Roajs, a partner at the leasing firm, added that the broad spectrum of services offered by MTU makes the company an ideal partner.
AirPro News analysis
The aftermarket for CFM International LEAP engines is entering a critical growth phase. As early-build Airbus A320neo and Boeing 737 MAX aircraft approach their first major shop visits, global MRO capacity is becoming a bottleneck. Lessors like Patriot Dynamics are securing maintenance slots early to protect asset values and ensure continuous availability for their airline customers. For MTU, locking in a 10-year contract with an expanding lessor provides the predictable volume necessary to justify the heavy capital expenditure at the new Fort Worth site.
Photo Credit: MTU Aero Engines
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