The $11 Billion Squeeze: Why Airlines and Engine Makers Are Locked in Aviation’s Most Expensive Standoff

The jet engine has always been the beating heart of commercial aviation—a marvel of engineering that transforms kerosene into the miracle of flight. But somewhere between the tarmac and 35,000 feet, this mechanical marvel has become the centerpiece of an industry-wide financial reckoning. When IATA’s Willie Walsh stood before reporters in Geneva last December and accused engine manufacturers of exploiting supply chain chaos to pad their margins, he wasn’t just airing grievances. He was articulating a fault line running through the entire aerospace ecosystem—one that’s costing airlines at least $11 billion annually and fundamentally reshaping how the industry creates and captures value.

Here are seven insights that reveal what’s really happening beneath the hood of aviation’s most contentious dispute.

The $11 Billion Supply Chain Impact at a Glance

Source: IATA/Oliver Wyman analysis

The Aftermarket Has Quietly Become the Main Event

There’s an old maxim in aerospace that the real money isn’t in selling engines—it’s in keeping them flying. GE Aerospace has elevated this principle into something approaching an art form. The company now derives over 70% of its commercial engine revenue from parts and services, a proportion that has steadily crept upward as its installed base of 78,000 engines continues to age and demand maintenance.

The numbers tell a striking story. In 2025, GE Aerospace reported services revenue of $30.1 billion in its commercial engines division alone—growth of 21% year-over-year. The company turned an $8.7 billion profit for the full year, up 32% from 2024, while revenue climbed 18% to nearly $46 billion. This isn’t the financial profile of a traditional manufacturer. It’s the balance sheet of what industry observers increasingly describe as a long-term technology and service partner that happens to build engines on the side.

CEO Larry Culp frames this dynamic as a natural consequence of the value proposition. GE invests roughly $3 billion annually in research and development, takes on substantial technological risk, and supports engines across decades-long service lives. The margins, he argues, reflect the value created over that entire lifecycle. But airlines see something else entirely: a company posting 20%-plus operating margins while they struggle with mid-single-digit profitability at best.

GE Aerospace Financial Snapshot (2025)

Source: GE Aerospace Q4 2025 Results

Shop Visits Have Become the Industry’s Most Precious Commodity

If you want to understand why tensions have reached a boiling point, consider this: turnaround times at engine repair shops for newer-generation engines have surged to roughly 150% above pre-pandemic benchmarks, according to Bain & Company. For Pratt & Whitney’s troubled GTF engines, the picture is even grimmer—average wing-to-wing turnaround times have ballooned from 140 days before COVID to more than 250 days over the past seven quarters.

This isn’t merely an inconvenience. It’s an operational crisis that cascades through every aspect of airline planning. When engines spend longer in shops, carriers must lease additional spare engines to cover the gap. Those lease rates have climbed 20-30% since 2019. Airlines must also hold larger inventories of spare parts—a hedge against unpredictable supply chain disruptions that IATA estimates is costing the industry $1.4 billion annually in surplus inventory carrying costs.

The MRO crunch has created a peculiar dynamic where shop capacity has become almost more valuable than the engines themselves. GE Aerospace has responded by announcing over $1 billion in investments across its global MRO network, including significant capacity additions in Brazil, Malaysia, Dubai, and Dallas. The company’s Malaysia facility recently achieved a 30% reduction in engine disassembly time through operational improvements—the kind of incremental progress that, multiplied across thousands of shop visits, begins to move the needle on industry-wide constraints.

Engine Shop Turnaround Times: Then vs. Now

Legacy Engines (CFM56, V2500)
Pre-Pandemic  ████████████████████ 100%
Current       ███████████████████████████ 135%

New-Gen Engines (LEAP, GTF)  
Pre-Pandemic  ████████████████████ 100%
Current       ██████████████████████████████████████████████████ 250%

GTF Wing-to-Wing Time
Pre-Pandemic  ████████████████████ 140 days
Current       ██████████████████████████████████████████████████ 250+ days

Source: Bain & Company, RBC Capital Markets

The GTF Crisis Has Rewritten the Competitive Landscape

While GE and CFM have faced their share of durability challenges, particularly with LEAP engines operating in dusty Middle Eastern and Indian environments, nothing compares to the ongoing catastrophe surrounding Pratt & Whitney’s geared turbofan family. As of late October 2025, some 835 aircraft powered by GTF engines were sitting in storage—a sharp increase from 748 at mid-year and a staggering 33% of the total GTF-powered fleet.

The consequences have been devastating for airlines that bet heavily on Pratt & Whitney’s fuel-efficient design. Wizz Air, the European ultra-low-cost carrier, saw operating profit plummet 61.7% in fiscal year 2025, with an average of 44 aircraft grounded throughout the year—equivalent to nearly 20% of its fleet. Mexico’s Volaris and VivaAerobus have been similarly hammered, with dozens of A320neo-family jets parked at any given time.

The underlying issue—powder metal contamination affecting high-pressure turbine and compressor components—has proven far more complex to resolve than initially anticipated. What began as a manufacturing defect has metastasized into a multi-year operational nightmare, with inspection times that were supposed to take 60 days stretching to 300 days or more. Some carriers, like Air Austral, have simply given up. The Réunion-based airline announced plans to retire its entire A220-300 fleet after GTF problems left it with an average of just 1.75 available aircraft throughout 2025.

Perhaps most remarkably, the value dynamics have inverted entirely. In parts of the aftermarket, a functional GTF engine now rivals the value of the entire airframe it’s attached to, leading some lessors to cannibalize nearly-new aircraft for their powerplants.

GTF vs. LEAP: A Tale of Two Engine Programs

Source: Cirium fleet data, industry reports

The Fleet Age Problem Is Getting Worse Before It Gets Better

Aviation’s supply chain woes have created an uncomfortable reality that nobody in the industry expected when the recovery from COVID began: the global airline fleet is getting older, not younger. IATA data shows average fleet age has climbed to 15.1 years—12.8 years for passenger aircraft, 19.6 years for cargo planes—as delivery delays force carriers to keep aging equipment flying far longer than planned.

The delivery shortfall is genuinely staggering. IATA estimates that at least 5,300 aircraft that should have been delivered are now delayed, while the order backlog has swelled past 17,000 aircraft—roughly 60% of the entire active fleet and the equivalent of nearly 12 years of current production capacity. Historically, that ratio hovered around 30-40%. The normalization of this structural mismatch between airline requirements and production capacity isn’t expected until sometime between 2031 and 2034.

This aging fleet phenomenon creates a vicious cycle for maintenance economics. Older aircraft require more frequent and expensive servicing, but the MRO shops are already overwhelmed handling premature maintenance needs on newer engines that haven’t lived up to their durability promises. The result is what IATA calculates as $4.2 billion in excess fuel costs annually—airlines burning more jet fuel because they’re operating older, less efficient aircraft while waiting for delayed new deliveries.

Engine makers bear some responsibility for this bottleneck. Airbus has been forced to park brand-new aircraft on the tarmac while waiting for engines, with Cirium data suggesting that 43 A320-family jets had flown but remained undelivered simply because CFM couldn’t produce enough LEAP engines. The cascade effect touches everything from scheduling flexibility to sustainability targets—carriers committed to emissions reductions find themselves stuck operating precisely the aircraft they were planning to retire.

The Growing Backlog Crisis

Source: IATA Annual Review 2025

The IATA-CFM Agreement Represents Both Progress and Its Limits

Against this backdrop of tension, the January 2026 renewal of the agreement between IATA and CFM International through February 2033 offers a glimpse of how the relationship between airlines and engine makers might evolve—and perhaps a template for the broader industry. The deal, originally struck in 2018 after IATA filed a competition complaint with the European Commission, establishes ground rules for aftermarket practices that the industry previously lacked.

The provisions are significant. CFM has committed to licensing its Engine Shop Manual to MRO facilities even if they use non-CFM parts, honoring warranty coverage based on what actually caused a problem rather than penalizing airlines for using alternative components, and generally facilitating third-party participation in the maintenance ecosystem. For the CFM56 engine family, this has translated into nearly 40 shops competing for overhaul work, with CFM itself handling only about one-third of shop visits.

Willie Walsh has been careful to acknowledge CFM’s leadership on this front. Other manufacturers, he pointedly noted, should step up. IATA is assessing whether legal or competition measures may be warranted against engine makers who haven’t embraced similar openness.

But even Walsh concedes the agreement is no panacea. It addresses practices around aftermarket competition but can’t conjure additional MRO capacity out of thin air or accelerate the production of spare parts when supply chains remain constrained. The $5.7 billion that IATA estimates supply chain failures added to engine leasing and maintenance costs in 2025 won’t simply evaporate because paperwork has been streamlined.

Key CFM-IATA Agreement Provisions (Extended to 2033)

✓ MRO facilities can use technical manuals even with non-CFM parts
✓ Warranty coverage based on actual cause, not parts sourcing
✓ Third-party repair solutions facilitated during supply constraints
✓ ~40 independent shops compete for CFM56 overhauls (CFM handles only ~⅓)
✓ Same open ecosystem model being applied to LEAP engines

GE’s Durability Push May Finally Be Gaining Traction

One genuinely positive development: after years of frustration, there are credible signs that engine durability is improving. CFM’s durability kit for the LEAP-1A engine, approved by U.S. and European regulators in late 2024, is designed to more than double time on wing in severe operating environments. Similar improvements are expected for the LEAP-1B variant—which powers Boeing’s 737 MAX—during 2026.

The work represents a significant corporate commitment. GE Aerospace engineers have conducted extensive dust ingestion testing that simulates conditions over the Arabian Desert, drawing on 15 years of lab work and millions of hours of field data from other engine programs. The company’s stated goal is to reach CFM56 levels of durability performance by 2028—a benchmark that may sound modest but reflects just how far current-generation engines fell short of initial promises.

GE’s Malaysia MRO shop has demonstrated what operational improvement looks like at scale, achieving 30% reductions in engine disassembly time. Total internal LEAP shop output grew by more than 30% during Q3 2025, and the company’s third-party MRO network has been expanding rapidly, with external shop visits roughly doubling.

For airlines, better durability means fewer unscheduled removals, more predictable maintenance costs, and less operational disruption. GE’s financial incentives are also aligned: engines that stay on wings longer require more sophisticated monitoring and eventually more equipment overhauls, feeding the high-margin services business that now defines the company’s economics.

The Next Decade Will Be Defined by Who Adapts Fastest

Perhaps the most striking aspect of aviation’s current predicament is how completely the industry’s value creation has shifted. Where aircraft sales once represented the primary commercial event, aftermarket services now dominate. With over 70% of commercial revenue flowing from services, GE Aerospace functions less as a manufacturer and more as what industry analysts increasingly describe as a perpetual technology subscription provider with hardware sales attached.

MRO Market Trajectory

Source: Oliver Wyman MRO Forecast

This model creates winners and losers throughout the ecosystem. Airlines and lessors operating older, less efficient aircraft find themselves squeezed as engine makers prioritize more profitable newer platforms. The cost of maintaining 20-year-old engines rises even as fuel efficiency suffers. Carriers face an uncomfortable choice: pay premium prices for scarce aftermarket parts or commit to multi-billion dollar orders for new aircraft that may not arrive for years.

For MRO providers, the current environment represents something approaching a golden age—if they can navigate its complexities. Demand for engine services is projected to exceed $150 billion annually by 2030, up from $120 billion in 2025. But capturing that opportunity requires building capabilities in next-generation platforms while simultaneously supporting legacy engines longer than anyone planned.

The supply chain constraints that have caused so much pain show little sign of abating before the end of the decade. Engine makers are making investments, but GE’s $1 billion MRO expansion and Safran’s €1 billion capacity increase can’t undo years of delivery shortfalls overnight. The industry that emerges will look fundamentally different—more concentrated, more service-oriented, and potentially more contentious in its commercial relationships.

Whether that transformation ultimately benefits travelers remains an open question. Airlines facing higher costs must recoup them somewhere, and ticket prices typically bear the burden. The record load factors of 83.5% that IATA reported for 2024 reflect strong demand, but they also reflect constrained supply—fewer aircraft means fuller planes means higher fares.

The jet engine, that marvel of precision engineering, will continue to propel millions of passengers through the atmosphere. But the business model wrapped around it has entered a period of fundamental recalibration. How industry participants navigate this—balancing short-term pressures against long-term partnerships—will shape commercial aviation for the next generation. The stakes, measured in the hundreds of billions of dollars, could hardly be higher.

What remains to be seen is whether the current crisis catalyzes genuine collaboration or simply entrenches adversarial positioning. Culp has emphasized that serving airlines isn’t a zero-sum choice between aftermarket support and new-engine production—carriers need both existing fleets maintained and modernization accelerated. The industry’s ability to deliver on that dual mandate, while navigating tariff uncertainties, labor constraints, and persistent supply chain fragility, will determine whether the next decade represents aviation’s next golden age or its most challenging chapter yet.

This article was produced in accordance with our editorial standards. Aviantics maintains strict editorial independence.

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