Aviation Investment
Due Diligence.
Maintenance condition and life limited parts account for roughly two thirds of the value of some current generation engines, against less than half for the previous generation at a comparable point in life. A buyer who prices the airframe and treats the engines as an afterthought is pricing the wrong object, and the error is usually measured in millions per engine rather than in basis points.
What aviation diligence covers that general diligence does not
Aviation due diligence is not general private equity diligence with logbooks attached. The asset flies, it is regulated in two or more jurisdictions at once, it is modular, and most of its residual value is concentrated in components that can be removed and sold separately from the aircraft they are bolted to.
Records are the asset, not the paperwork about the asset.
A missing airworthiness release certificate on a high value life limited part is not a filing defect. It is a hole in title to that part's remaining life, and the part is worth what its documentation can prove. Industry guidance now treats the redelivery book as a defined product with a specified index: certified airframe and engine status, airworthiness directive and service bulletin files with supporting evidence, back to birth traceability on life limited parts, current borescope and power assurance results, and shop visit reports with complete supporting packs. Widebody archives from earlier generations still run to hundreds of physical boxes. One published digitisation case scanned more than 200 boxes to cover two A330s and one 777 before anyone could begin the review.
Engines are a cash flow instrument.
The questions are remaining green time to the next performance restoration, exhaust gas temperature margin and its trend, the most recent hot section borescope, the risk of stub life on life limited parts, and a shop visit cost that reflects what shops charge now rather than what a lease was written against. Published 2026 ranges put a performance restoration at roughly $1.5 million to $3.5 million on a CFM56, $2.0 million to $4.5 million or more on a LEAP, and $2.5 million to $5.0 million or more on a PW1100G. Widebody visits run from $3 million to $9 million, and a complete GE90 performance overhaul excluding replacement life limited parts has been reported approaching $22 million. The life limited parts stack is a second cheque on top: roughly $2.5 million to $6.0 million on a CFM56, $4 million to $10 million or more on a LEAP, and $8 million to $20 million or more on a GE90.
The lease is a technical specification in legal clothing.
Redelivery conditions determine whether a buyer inherits a clean asset or a dispute: hard time minimums, floors on remaining cycles for engines and for each life limited part, borescope rejection criteria, return compensation formulae, holdover rent, lessor approval over workscope, and whether reserves are cash or power by the hour. Investors who are experienced in other asset classes underwrite the coupon and the collateral and miss the condition specification that converts one into the other.
Jurisdiction is not the same as accession.
Russia was a Cape Town Convention contracting state with irrevocable deregistration authorisations on file. After February 2022 more than 400 Western leased aircraft stayed. English Commercial Court proceedings through 2024 and 2025 covered, at one point, 306 aircraft and 40 engines, with claimed sums beginning near $13.5 billion and still near $9.7 billion after some settlements. India is the current live test: deregistration was refused under an insolvency moratorium in the Go First case until a 2024 court order required processing of 54 aircraft within five working days, and the 2026 rules that restored a process also added a two month waiting period and a requirement to settle specified post default dues before export.
Engines are separately registrable.
Under Cape Town an engine is its own aircraft object. It is not covered by the airframe deregistration authorisation. A buyer who perfects security over the airframe and stops there has secured the cheaper half of the asset.
The process, and what each phase is for
Phase one, desktop review
Two to four weeksThe specification is checked against what was advertised: manufacturer serial number, engines by serial number, auxiliary power unit, landing gear, cabin, extended operations approval and category of approach capability. Utilisation is read for shape as well as size, because the ratio of hours to cycles determines whether the aircraft has been consuming life limited part life or calendar life. Maintenance status summaries establish the last and next heavy check, landing gear overhaul, auxiliary power unit overhaul, engine shop visit and remaining life limited part life. The lease is abstracted. Title and registry are searched, including any prior registration in a sanctioned jurisdiction. Insurance certificates are read for declared value against current market value and for territorial exclusions on war risk.
The output is a technical memorandum, an issues list graded red, amber and green, a valuation bridge across half life, full life and maintenance adjusted values, and a recommendation to proceed, look deeper or walk away.
Walk away triggers at this stage are incomplete birth records on a high value life limited part stack, an unresolved airworthiness directive, an operator in a jurisdiction where deregistration has recently failed in practice, an engine on a reduced inspection interval with no explanation, refusal to permit a borescope or records room access, and prior placement in a sanctioned jurisdiction with unsettled insurance.
Phase two, physical inspection and records audit
Two to three weeksThe aircraft is inspected at the operator's base or at a maintenance input. Records are reviewed on site or in a digital data room. Every engine receives a borescope covering compressor, turbine and combustor sections, usually recorded and written up against the limits in the lease or the manufacturer's manual. This is where a nominally serviceable engine with blade distress just inside limits is separated from a clean one. They are not the same asset and they should not carry the same price.
The physical report covers structure, including repairs assessed against the structural repair manual, landing gear, cabin, components against the certified listing, and a records completeness matrix mapped to the redelivery book index.
Cost is directional rather than tariffed. A desktop and records screen on a single narrowbody sits in the tens of thousands of dollars. A full physical inspection and records audit on one widebody typically runs from the high tens into the low hundreds of thousands, depending on location, engine count and whether an engine has to be stripped.
Phase three, financial modelling
One to two weeksMaintenance reserves are not the cost of maintenance. They are a contractual prepayment against specified events, often indexed, often inadequate against current shop pricing, and sometimes replaced entirely by power by the hour arrangements. Three layers have to be modelled separately: the contractual reserve in and compensation out, the economic cost of the next events at today's shop prices, and the residual value of remaining green time and life limited part life if the asset is parted out rather than flown.
Discount rate treatment matters more than the rate chosen. There is no published standard. What matters is consistency: discounting a $6 million future engine visit at a private equity hurdle rate while leaving residual value undiscounted produces a number that flatters the deal by construction.
Appraisals in 2026 must state the shop visit cost deck they used. A valuation built on a 2022 cost deck will miss a current generation engine by a wide margin.
Portfolio diligence, and what compression actually costs
Nobody reads every page on fifty aircraft inside a four week exclusivity. Best practice is risk weighted sampling rather than random sampling.
The first tier is a complete file on every aircraft with a near term engine shop visit, a short life limited part, prior damage, a registry change or a sanctioned jurisdiction in its history. The second tier is a deep sample clustered by type, age and operator, typically 25 to 40 per cent of the pool. The third tier is desktop review with exception reporting, and any amber finding can be elevated into the first tier.
A twenty aircraft narrowbody portfolio on lease, with a competent digital data room and a 30 per cent physical sample, is a mid six figure technical and legal exercise before valuation and insurance advice. A fifty aircraft mixed generation pool with paper records and several registry moves is a seven figure workstream if it is done properly.
Compressed timelines do not remove work. They move it into the warranty. What gets cut first is structural sampling, full airworthiness directive evidence packs, engine trend data, local counsel enforceability opinions and insurance wording review. What survives is status lists, a walkaround, a registry search and a lease abstract. The risks that get cut are precisely the expensive ones. A fast close is defensible only with a holdback, a technical escrow, or a walk away right on named findings.
Where deals go wrong
These are categories rather than named transactions, and the impacts are order of magnitude figures grounded in published ranges.
The status list that was not the aircraft.
A buyer relies on an operator status list and a recurring airworthiness directive or an unapproved structural repair is not in the evidence pack. The next regulator or lessor rejects the aircraft at transfer. Impact runs from the mid six figures into the low seven figures on a widebody structural item, plus weeks or months out of service, and the sale breaks entirely if the repair cannot be approved.
The shop visit priced off a stale deck.
A model uses a pre 2022 assumption of $1.2 million to $1.6 million for a CFM56 performance restoration, or a widebody visit that excludes life limited parts. Current pricing is materially higher, an extensive legacy visit can exceed $8 million once new life limited part requirements are included, and a new CFM56 core stack alone is cited in the $5 million to $6 million region. Impact is $2 million to $15 million per engine against the investment committee paper, multiplied by two or four engines. On a ten aircraft package this can be the entire equity cheque.
The return condition nobody read.
The buyer of an on lease portfolio reads rent and term but not the return condition. The lease requires 3,000 cycles remaining on the engines and on each life limited part, and a clean borescope. The engines are within legal life and outside the lease floor. Impact is end of lease compensation and a forced shop visit in the $2 million to $8 million range per shipset, plus holdover rent. Engine redelivery work needs six to twelve months of lead time, so a buyer inheriting a lease with eight months to run has inherited that calendar as well.
The deregistration that took a quarter.
A deal assumes a two week deregistration. The exporting authority wants an inspection slot, the importing authority will not register until airworthiness is assessed, and airport or tax dues attach to the aircraft. Impact is months of zero revenue with parking and insurance still burning, and a ferry flight that cannot legally operate. On a widebody, a quarter of lost rent plus costs is already a mid seven figure event.
The parts that were never what the paperwork said.
Falsified release certificates on engine material have moved from curiosity to standard red flag. Regulator alerts have covered dozens of falsified certificates on CFM56 material, a 2025 United Kingdom conviction involving more than 180 affected engines, and a separate 2026 warning that formally scrapped turbofan parts, including life limited parts, were diverted before they were mutilated. Impact is an engine removed and quarantined, parts written to zero, and possible grounding of a shipset. A single contaminated engine can erase the trade profit on the whole aircraft.
The aircraft that is not the aircraft in the lease.
The certified listing does not match what is on the ramp. The engine on the wing is not the serial number in the lease, a landing gear shipset has been swapped, or cabin modifications lack approvals the next state of registry will accept. Impact is a title defect on the highest value component and a refused export certificate of airworthiness.
Currency that cannot leave the country.
The asset and the debt are in dollars, the lessee earns in a soft currency with delayed repatriation, and reserves collected locally are not reserves available to the owner. This presents as a credit problem and is a capital controls problem. The protection is payment account architecture and a willingness to decline the credit.
What Boston Warwick provides
Boston Warwick works buyer side. The work is a situation file on the specific aircraft or pool rather than a records dump: utilisation and engine status, lease return economics modelled against the actual return conditions, registry and insurance flags, and a shop visit cost deck built on current pricing rather than on a reserve schedule written years ago.
That comes with a red, amber and green issues list carrying explicit walk away triggers, and a memorandum written in the language an investment committee uses rather than as a maintenance trip report.
Boston Warwick does not employ the borescope technician or the records auditor, and does not pretend to. It scopes and controls those appointments, and it reads what comes back against the investment thesis. The distinction matters: an inspection firm can tell a buyer what condition the asset is in. The question a principal needs answered is whether that condition changes the case for buying it.
The diligence draws on the same evidence base as the published research, including the September 2026 files on fleet backlog and delivery slippage, the boundary between narrowbody and widebody missions, and fleet age exposure by carrier class, alongside The $159 Barrel on where fuel cost has landed and the engine maintenance work that determines what a shop visit now costs.
Investor Advisory
Buyer side technical, legal and financial work on aircraft, engine and portfolio acquisitions.
ResearchPublished Reports
The evidence base behind the diligence, including fleet backlog, mission boundaries and fuel cost.
Coming SoonEagle
Fleet and engine intelligence for diligence teams. Coming soon.
What is aviation due diligence?
Aviation due diligence is the technical, legal and financial review carried out before buying an aircraft, an engine or a portfolio of either. It differs from general asset diligence because most of the value sits in components rather than the airframe: maintenance condition and life limited parts account for roughly two thirds of the value of some current generation engines. It covers records completeness and traceability, engine condition and remaining life, the return conditions in any lease, registry and deregistration enforceability, and insurance.
How long does aviation due diligence take?
Between five and nine weeks for a single aircraft done properly: two to four weeks of desktop review, two to three weeks of physical inspection and records audit, and one to two weeks of financial modelling. Portfolios are not linear. A twenty aircraft pool with a good digital data room and a 30 per cent physical sample is a mid six figure exercise. Compressed two to three week processes do not remove work, they move it into warranties and holdbacks.
What does an aircraft records review involve?
Verifying that the documentation supports the value being paid for. That means certified airframe and engine status, airworthiness directive and service bulletin compliance with supporting evidence rather than a summary list, back to birth traceability on every life limited part, current borescope and power assurance results, and shop visit reports with full supporting packs. A missing release certificate on a life limited part is a hole in title to that part's remaining life, not a filing error, and falsified certificates on engine material are now a standard red flag rather than a rarity.
Why do engines need separate diligence from the aircraft?
Because they are separate assets in law and in value. Under the Cape Town Convention an engine is its own registrable aircraft object and is not covered by the deregistration authorisation that applies to the airframe. Financially, a single performance restoration can cost $1.5 million to $5 million or more depending on type, with the life limited part stack a second cost on top, so an engine priced on a stale cost deck can produce a $2 million to $15 million error per engine against the investment case.
Last updated: September 2026
Price the asset that is actually being bought.
Boston Warwick works buyer side on aircraft, engine and portfolio acquisitions, from desktop review through physical inspection to a model an investment committee can sign.
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