Josh Sullivan: And then secondly, I just — I know you’ve talked about the parts business averaging around 35% EBITDA margins. Obviously, 50-plus is a good result this quarter in EBITDA. But what are the moving parts around, maybe EBITDA per module?
Joe Adams: So it’s a function of mix, certain modules we have higher margins on, particularly the core. It’ll be a function on the size of the customer, and it’ll be a function on the timing and the urgency with which they need the module. So it sort of all goes into the mix on a quarterly basis. And we’ve been averaging about $500,000 per module in each of the quarters. We’ve had a couple of times where we’ve had some positive surprises because another reason is we often can buy things really cheaply. As I mentioned, when we buy a package of engines, we might end up with a very low basis in a module that produces an outsized gain for that reason. So — but I would say that the $500,000 has been pretty steady over the last couple of years and it’s a good assumption going forward until we have more PMA.
Josh Sullivan: Great. Thank you for the time.
Joe Adams: Thank you.
Operator: Thank you. Our next question comes from Myles Walton with Wolfe Research. Your line is open.
Myles Walton: Thanks. Joe, could you talk about the V2500 MRE program where it’s being worked? How big could the contribution be? And then in respect to your comment that you — your vision for FTAI is to be the leading full service aftermarket power provider globally for the NG and the — or the CFM — and the 56 and the V2500 engine, can you just give us a picture of what does that mean in terms of quantum, who is the leader today?
Joe Adams: Sure. So maybe a bit of history. I mean, we have owned V2500 for several years, so it’s not that we just discovered. We’ve had about 50 to 60 engines in the portfolio for a while. Starting about six months ago, we got particularly interested in it with the GTF powder metal issue coming on the scene, it was obvious that many of those V2500 operators who had thought they would be phasing those engines out over the next three years to four years, were going to end up keeping them much, much longer. And that’s the main driver what peaked our interest in that engine. So about six months ago, we started hiring people, building up our engineering talent expertise, talking to MRO partners, lining up assets to buy. And it’s been very, very successful.
It’s all in place, probably a lot better than I would have ever expected as the demand for shop visits is extremely high. And a lot of operators either don’t have the capital or the ability to shop those engines today. So there’s a tremendous opportunity for us to step in and do that. We have today about 15 engines in maintenance shops. We’re using two different shops right now. There’s multiple providers that we’ve discussed, and we’re sort of — it’s a bit of a test drive right now where we’re — we’ve got some very attractive short term deals. And ultimately, we will select probably a long term partner on the MRO side or two to work with over the next few years, but we haven’t done that fully. We also are very close on a large fleet deal where we would take over the management of engines on over 30 aircraft for an airline, V2500s, and we would then be responsible for engine exchanges.
So as we have used the term MRE, we maintain, repair and then exchange. So when an engine is run out, needs a shop visit, the airline gives that back to us and we give them an engine that’s been through a performance restoration, has hours and cycles that they need to keep flying. So that we’re fairly close on, I expect in the next few weeks. And we have a couple of other deals like that. So the prospects are pretty exciting and it does sort of give us a complete offering for anybody that operates a 737NG or an A320ceo, we can provide CFM56 or V2500 power. And that really is — our mission is to provide to airlines flexibility in the power they need, so that we always have an engine available if they need it. And if they have too many, they give it back to us without a fight over return compensation.
So that’s very compelling for a lot of airlines. And then we provide them immediate and tangible cost savings because they don’t have to manage a shop visit, they don’t have to have an engineering department, they don’t have to go provision spares, and they don’t have to find out that the shop visit they thought was going to cost a million dollars cost $4 million. So there’s a growing recognition that that is an easy thing for airlines to buy into, is we can save them time and money and provide them great flexibility, as we say to them, what don’t you like about that? Which part of it is unpalatable? And there isn’t a part that’s unpalatable. So it’s a great sell and that’s what we’re shooting for as our reason for being as a company is to provide that leading provider of aftermarket power to the global industry for those aircraft.
