Engine Lessors Dispute Teardown Value Outlook
AerCap and ELFC leaders offered conflicting views on whether spare engine values and aircraft teardown returns will hold up.
Updated on Nov. 2, 2026 in Corporate Finance
AerCap CEO Aengus Kelly said spare CFM Leap and Pratt & Whitney engine values are likely to hold up during an Oct. 28 investor call. ELFC CEO Richard Hough questioned lessor assumptions that premature aircraft teardowns would yield better returns.
Why it matters
Engine values and teardown economics shape asset valuations and capital allocation across the aircraft leasing sector. Growth markets operating in harsh environments put new-technology engines under pressure, making time on wing a key variable for lessors.
Richard Hough said he is aware of more than 100 new-tech narrowbody aircraft earmarked for teardown, while AerCap's Aengus Kelly said he does not expect time on wing for new-technology engines to improve dramatically in harsh environments.
The players
AerCap
AerCap is the world's largest engine lessor and manages the world's largest fleet of commercial jet aircraft.
ELFC
ELFC is an independent engine lessor led by CEO Richard Hough.
The details
Aengus Kelly made his remarks on an Oct. 28 investor call, responding to a question that could have drawn on a recent Engine Yearbook interview with Richard Hough. Kelly said sustained engine demand is expected for a long time, with only gradual improvements in time on wing for new-technology engines.
Timeline
Oct. 28, 2026: Aengus Kelly makes engine demand remarks on an investor call.
Nov. 2, 2026: Aviation Week publishes an article on AerCap's engine comments.
2027: Engine Yearbook 2027 expected to be published soon.
Market Dynamics
The dispute between AerCap and ELFC reflects a broader disagreement in the engine leasing market about whether new-technology narrowbody engines will sustain value as growth shifts toward harsh operating environments. Growth markets now concentrate in regions where time on wing for these engines is a central pricing question.
Investors holding aircraft leasing exposure face uncertainty over whether spare engine values will hold or whether teardown strategies will outperform leasing returns. Asset valuations for new-technology narrowbody engines depend on how time-on-wing performance develops in harsh operating environments.
The takeaway
Engine values for new-technology aircraft depend heavily on operating environment and time on wing, so lessor forecasts on these assets warrant close scrutiny. Watch for the Engine Yearbook 2027 for further data on teardown economics.
Further reading
Explore more in Corporate Finance for context on how lessors price aircraft and engine assets.
