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Aviation News MRO: JetBlue takes back control of its maintenance costs

MRO: JetBlue takes back control of its maintenance costs

Emilie Drab
18 OCT 2018 | 691 words
MRO: JetBlue takes back control of its maintenance costs
© JetBlue
The vital restructuring of JetBlue is well underway. After stunning growth despite its position centred on a pretty difficult market (the east coast of the United States), the young American airline is facing more and more competition from traditional airlines which are managing to propose more low-cost products than it can. The airline has therefore been forced to launch a vast restructuring and above all cost control plan, including the major contracts it signed with Airbus for 85 A321neos and 60 A220s. And one of the points to which it is paying specific attention is its maintenance.

The figures speak for themselves. The costs associated with the maintenance of its current fleet increased by 13.3% over the period 2010-2016 (while its low-cost competitors have reduced theirs by 0.6%) and now stand at 800 million dollars per year. Steve Priest, JetBlue's executive vice president and financial director explains that this is due to the fact that the airline was too small when it was negotiating its maintenance agreements to be able to get favourable conditions and its growth over these last few years has amplified the negative effects.

"This is no longer the case today. We have the size, the scale and the resources to make the difference. We have 250 aircraft in service and over 150 on order; this gives us more weight in negotiations with MRO service providers. "

Engine maintenance in the firing line

Steve Priest emphasises that "there aren't just engines". The costs associated with airframe maintenance increased by 8% over the period for the Airbus fleet and fell by 1% for the Embraer fleet. As for components, costs rose by 5% and 13% respectively. JetBlue has launched negotiations with its service providers to renegotiate more advantageous and more long-term contracts and to optimise the maintenance programme in relation to plane use.

Engines are still the critical point for JetBlue: costs have risen 24% for the A320s and 29% for the E190s, and expenditure is now 320 million dollars per year. "Maintenance costs have become prohibitive for the E190 engines - we have asked ourselves what this would mean as the fleet ages and this question was essential in our decision to order A220s. And our costs have just kept increasing for the A320 engines. "

The A321neo and A220 orders provided the airline with the opportunity to negotiate contracts from scratch. "This is why we've taken our time to sign our orders, they were influenced by the engine contracts. We could have rushed to sign but we wouldn't then have had the best conditions for their maintenance. The 85 A321neos are arriving from March 2019 and the A220s from August 2020; the engine maintenance contracts we have put in place protect JetBlue for the long term. " These contracts include long-term flying hour maintenance, reducing the risks of cost increases. JetBlue says that it is concentrating on spare parts and limited lifetime parts, which represents the airline's greatest expense. In addition, Pratt & Whitney should be picking up the tab for any unexpected expenses associated with the use of a new platform - the PW1000 family.

Although the days are numbered for its E190s (the last one should be leaving the fleet in 2025), the American airline has reworked its agreements for its CF34s, and particularly the agreements for limited lifetime parts, to improve its control over the fleet until the planes are released and to have maximum flexibility in reorganising the withdrawal timetable.

At the same time a tender process is underway for the maintenance of its V2500 engines in provision of several workshop inspections and component replacements over the coming years. Here again JetBlue is also seeking to guarantee a certain level of flexibility in its future contract to be able to withdraw its oldest A319/A320ceos if necessary. It is planning to modernise its engine fleet at the same time.

All of these MRO decisions will bear fruit later once the fleet modernisation programme is fully underway. But JetBlue is expecting reductions in its MRO costs of between 100 and 125 million dollars by 2020 by renegotiating its current contracts. 70% of this objective has already been met.
Emilie Drab
Assistant editor
Civil aerospace, Air transport


 
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