Embraer opens P&W repair hub as demand for engine maintenance rockets

By Gabriel Araujo

SAO PAULO (Reuters) - Brazilian planemaker Embraer on Thursday opened a maintenance hub for Pratt & Whitney (P&W) engines in Portugal, which it expects to bring in an additional 600 million euros ($653 million) in revenues per year once fully operational.

The move comes amid surging demand for aircraft maintenance as airlines and manufacturers struggle with supply chain snags in the wake of the pandemic and more frequent engine repairs.

The P&W-authorized maintenance facility at Embraer's OGMA subsidiary near Lisbon will be able to overhaul P&W engines that power jets made both by the Brazilian firm and larger peer Airbus.

P&W, part of RTX Corp, has struggled since last year with a rare powder metal defect affecting mainly the Airbus A320neo jet, which led it to call for accelerated inspections that airlines say can take up to almost a year to complete.

"Demand is high. All shops in the world have been full," the head of Embraer's Services & Support unit, Carlos Naufel, told Reuters. "The first engines we are receiving are from European airlines, but going forward they could come from anywhere."

Consultancy Bain said in a report last week that airlines are facing their longest ever waits for engine maintenance, with demand likely to peak in 2026, constraining carriers' growth and adding costs.

OGMA, which already provides maintenance for Rolls-Royce engines, will initially offer services for P&W's PW1100G-JM geared turbofan engine, which powers the A320neo family.

Starting in 2026, it also plans to overhaul the PW1900G engine equipping Embraer's next-generation E2 jets.

At its peak, the facility is expected to have an annual capacity for 240 engines and generate 600 million euros in revenues - more than the $500 million the firm had forecast when it said last year it planned to open the hub.

Naufel did not detail the initial capacity nor when the peak should be reached, but said there would be a ramp-up year after year.

Embraer's Services & Support unit in 2023 accounted for 27% of group revenues, or $1.4 billion. Its backlog at the end of last year stood at a record $3.1 billion.

Naufel said the unit expects to double yearly revenues by 2030.

"If you ask me what the term is for services and support, I'll say 'accelerated growth'," the executive added. "The sector is heated and we have been keeping up with it."

($1 = 0.9194 euros)

(Reporting by Gabriel Araujo; Editing by Mark Potter)