So the – if you assume that – on the OE side, it was all about net offset. You can see our total $200 million increase, let’s call it, $120 million plus, plus comes from the spares assumption. And so that’s how you get there. In terms of when you think through what’s going on at the moment, clearly, the existing engine, which is now all past model, which is the CFM56. Then we have not yet seen the peak of spares for that business. And because of the lack of current narrow-body production by Boeing is that it’s the airlines are working the fleet hard. And therefore, CFM56 it’s probably going to peak more like 25, maybe 26 [ph] now, and that’s still increasing. So that’s good. The 737 MAX is – it’s obviously been having its own increase in, let’s say, MRO shop visits.
And on the current version of the LEAP engine, those won’t peak in my view until well after 2030. And – so we’re seeing an increase there. And I’ve also talked on the last earnings call about the immediacy of the time on wing issue and they’re producing a little bit of extra revenue. I probably overstated calling it at a bubble for three or four years, but that’s going to go on. Both for the LEAP engine and in particular, the Geared Turbofan, and that’s well reported. I think what we’ll see is that there will be a gradual introduction of the new improved robust turbine blades. And that’s probably more significant as we go into 2025 and beyond than it is in 2024. But that obviously the – assuming that is successful in terms of the durability, and I have every reason to believe it will be, then I guess that affects shop visits coming, making up about 2030 and beyond.
But meanwhile, of course, we’ll have the benefit of LEAP – current production for the last – let’s call eight years and the Geared Turbofan for longer, that will be increasing that – that’s a road map through. So it’s a long way of saying we should have improved asset economics around more robust fixes for GTF and LEAP that fixed timeline wing issues. Plus the increased spares demand initially from the CFM56, which is still coming at us, and it’s good. And then obviously, further increases to the LEAP, which and Geared Turbofan, which include the timeline when you issue the well reported.
Doug Harned: Very good. Thank you.
John Plant: Thank you.
Operator: The next question is from Ken Herbert with RBC Capital Markets. Please go ahead.
Ken Herbert: Yes, good morning everybody. Hey John, I appreciate all the color there on the aftermarket you just provided. It sounds like you’re seeing as part of that $100-ish million plus in the commercial spares business this year. What’s your visibility on that beyond this year? Do you think we get a point assuming Boeing and Airbus start to clean up, Boeing in particular, deliveries of new aircraft that moderates fairly quickly? Or do you get a sense that, that could have substantial room to run even beyond this year, just considering increased use of some of the legacy aircraft? I know you went through maybe CFM56 peak is pushed to the right. But how do you view that flowing into your business on the spare side?
John Plant: I see commercial aerospace sales going up in 2025, 2026 and 2027. It’s a bit too difficult to get up beyond that, but I see rising reducing the spares area during those years. I also see increased spares for the F-35. And in the past, I’ve said I think by the time we get to 2025, we could be seeing spares revenues almost as much as the current OE demand for F-35 turbine blades. And then what happened after depends upon the rate of production and the rate of usage for the F-35 around the world. Clearly, in recent months it has been an extraordinary list of, I will say, time in the air for F-35s. On the other hand, I’ve also read articles about the plan that we know to run them a little bit less. But nevertheless, we see F-35 spares being very strong over the next few years.
And the – I think the aircraft park at the end of last year was just under 1,000 aircraft and now it’s over 1,000, but will be increasing, assuming that Lockheed delivers, let’s call it, about 150 aircraft a year, which looks like doing 150 every year for probably the next 10 years. But so – by which time, the fleet of F-35s around the world will be very large and the spares will be extraordinary. And then in between of that, let’s call it in around the 2028 mark; I think we’ll see improved turbine componentry to meet the requirements where additional thrust is required to offset the current draw from the weapon systems and avionics that is currently the issue being addressed.
Ken Herbert: Great. Thank you very much.
John Plant: Thank you.
Operator: The next question is from Myles Walton with Wolfe Research. Please go ahead.
Myles Walton: Thanks. Good morning. Hey John, on the fastening unit, the commercial aero underlying growth there was pretty outstanding and the acceleration in the last four quarters. I think about 1/3 of that business is distribution. Is it – the distribution business growing faster than that average? Are they pulling because they see scarcity coming? And also, just to round out, are you feeling better about fastening eclipsing prior peak margins at this point yet?
John Plant: Certainly, the program that we put in three years ago of creating a separate segment within our fasteners business for distribution is a notable success for us. And I’m going to say we’ve probably seen an almost doubling of that business in the last three years. We don’t provide like all makes to everybody and try to manage all the logistics of people, but this is trying to capture that margin previously that we had effectively passed on to other distributors. Because we distribute those parts. And we mainly focus on those parts which are proprietary with technology moats around them from the Howmet say, suite of fastener brands. So that is growing faster than the OE business for us, and therefore, again, that’s been another thrust for us, I’ll say improvement in fastener margins.
So far, any commentary that I’ve given, Myles, I’ve never been willing to say that we’ll achieve 2019 levels of margin rates because I think those were the very different conditions. I mean, there we had 787 running at 13 or 14 a month, as an example and the A350 also at a higher rate. So the – I mean, as you know, what we talked about on this call is that those rates are way – it may be 1/3 of that. And so it’s all wrapped up in our own progression of efficiency, but also what’s the mix of aircraft come 2027? I might be a bit more bullish if you’ll guarantee to me that Boeing will be making 14 787 and now I think I read that Airbus is going to make 15 a month of A350. I mean, if that happened, it’s all great. It’s really good for us.
