Asset Value and the Aircraft Maintenance Revolution

Lou Mancini Vice President/General Manager
for Commercial Aviation Services

Why should the financial community also be interested in aircraft maintenance? The answer is simple: airplane asset value.

The airplane’s value as an asset is vital in the determination of financial terms for airplane acquisitions. In asset-based financing, the maintenance condition of the asset is a crucial variable in managing risk. 

Maintenance condition reflects the cost of outstanding maintenance, how much time has passed since the airplane’s last maintenance check, the quality of past maintenance, and the quality of maintenance and operational records.

Today, determining and keeping track of an aircraft’s maintenance condition presents challenges to financiers. Variability of maintenance practices makes it difficult to predict airplane maintenance condition, and maintenance documentation does not provide the transparency necessary for gauging maintenance-related economic risk.

Boeing is bringing technology to bear on the maintenance process to reduce complexity, variability, and economic risk to airplane owners and investors.

Airplane maintenance, which seems such a simple concept, is currently highly complex in practice. The airplane owner or operator must orchestrate the activities of scores of functional groups within the airline; at the aircraft and engine manufacturers; at hundreds of parts suppliers and contract maintenance providers; and at regulatory agencies. Moreover, maintenance processes differ according to aircraft type, age, operational history, and airline business model.

As a consequence of the tangle of supplier relationships and variable maintenance practices, a typical commercial airplane will amass shelves full of records as it ages. Boeing Commercial Aviation Services offers business solutions that help airlines simplify and standardize maintenance through efficient management of information and infrastructure.

Electronic Flight Bag, Airplane Health Management, and Integrated Materials Management are three important examples of business solutions that use information technology to streamline maintenance and reduce economic risk to financiers.

Electronic Flight Bag is standard on the 787 and available for 737NG, 777, 747-400 and 747-8 airplanes.

Electronic Flight Bag (EFB) replaces volumes of paper documents and checklists that pilots have traditionally carried to the flight deck. It allows airlines to update and distribute documents, instructions, routing information and crew assignments electronically. Pilots use EFB to calculate takeoff and payload performance on the runway, giving airlines flexibility to make the most of the airplane’s revenue capacity and fuel economy. Of greatest interest to financiers, EFB captures a digital record of pilot fault reports and details of the airplane’s maintenance and operational history. Linked to a central maintenance database, this information can help owners make a complete and up-to-date assessment of the airplane’s maintenance condition.

Airplane Health Management (AHM) monitors the airplane’s condition in flight, providing real-time decision support to airline operations and maintenance personnel on the ground. AHM transforms cryptic fault codes and performance data into prognostics information that allows airlines to resolve maintenance issues before they cause major schedule delays or flight cancellations. The system prioritizes fault reports so airlines can schedule service efficiently. AHM’s fleet-wide statistical analysis and prognostication ability help avoid unscheduled maintenance, which increases aircraft utilization. For financiers, this can mean fewer outstanding maintenance issues when the time comes to evaluate the airplane.

Technical experts co-located at the Boeing Commercial Airplanes Operations Center are available every day, around the clock, to help operators maintain airplane asset values and keep airplanes in peak revenue-earning condition.

Integrated Materials Management (IMM) transfers much of the responsibility and cost for managing spare parts and logistics from the airlines to Boeing and its global team of logistics partners. The IMM team retains ownership of spare parts inventories so airlines pay for parts only when the parts are delivered to the work site for installation on the airplane. Parts are deployed near airline maintenance operations for prompt delivery directly to the work site. Boeing manages logistics, warranty, order tracking, and inventory replenishment. For airlines, this means lower acquisition costs and a streamlined supply chain. For financiers, reducing the initial spares and logistics component of acquisition cost means that the airplane’s asset value can cover a larger percentage of the initial investment. And, because parts and delivery processes are standardized, the maintenance condition is more transparent and predictable.

These and other Boeing maintenance offerings are accessible worldwide through the MyBoeingFleet.com portal, the world’s largest business-to-business website. MyBoeingFleet.com allows airlines to completely manage the technical interface with Boeing, suppliers, MRO (maintenance, repair, and overhaul) contractors, and financiers.

More than 20 airlines have already signed on as customers for Boeing maintenance solutions. These customers represent the full spectrum of commercial carriers, from large network and international airlines to the most successful low-cost carriers. Standardizing maintenance procedures across the spectrum of carriers will help reduce the variation that creates economic risk.

GoldCare, the next level of lifecycle management service, will be introduced concurrently with the 787’s entry into service. GoldCare takes advantage of the advanced capabilities of the 787 airplane to integrate today’s Commercial Aviation Services (CAS) maintenance solutions with the services of suppliers and MRO providers. In addition, GoldCare will streamline and standardize maintenance operations, whether they are performed by the airline, an MRO provider, or a combination of both. The result is consistent maintenance quality, streamlined maintenance records, and reduced economic risk.

Ultimately, GoldCare will integrate all aircraft maintenance stakeholder interests into a single solution. Financiers will be able to visit the MyBoeingFleet.com web portal to access complete, up-to-date information on their airplanes’ maintenance condition—including service bulletin status, repair history, maintenance check status, and the as-flying configuration—by airplane tail number.

Boeing is committed to integrating the interests of the financial community into its products and services. Boeing airplanes and business solutions provide more efficient ownership transfer, enhanced operator credit worthiness, and improved lifecycle asset value.