FTAI's 27-Jet WestJet Deal Shows How Sale-Leasebacks Fund Airlines

On September 28, 2026, FTAI Aviation announced its acquisition of 27 Boeing 737-700 aircraft from WestJet in a deal split in two ways: 17 jets that FTAI immediately leased back to WestJet, and 10 off-lease aircraft destined for parts. The transaction demonstrates how sale-leaseback arrangements have become essential tools for airlines managing cash flow and fleet transitions, while creating profitable opportunities for aircraft leasing companies.

A sale-leaseback is straightforward in concept but strategic in execution: an airline sells an aircraft it owns to a lessor, then leases the same plane back and continues to operate it. For WestJet, the deal converts the equity built up in the 737-700s—an aging single-aisle aircraft that the airline is retiring from service—into immediate cash. For FTAI, the arrangement opens two distinct revenue streams: lease payments from WestJet and a supply of engines and components to feed its aerospace parts division.

How airlines unlock cash trapped in older aircraft

An airline that buys an aircraft and finances it through debt builds equity over time as it makes loan payments. When WestJet decided to retire its 737-700 fleet, those aircraft had value. A sale-leaseback transaction converts that equity into cash without requiring the airline to sell its operational fleet outright.

Here is the basic sequence: WestJet sells the 17 aircraft to FTAI. The sale proceeds allow WestJet to pay down or eliminate any remaining debt on the planes, and pocket the difference. Then WestJet immediately signs a lease for the same 17 aircraft and continues flying them under the new arrangement. From the airline's perspective, it has converted a balance-sheet asset into working capital.

The financial appeal runs deeper than simple liquidity. Lease payments are typically lower than the financing costs airlines would otherwise pay. As AirlineGeeks notes, "The airline would be able to reduce some of its aircraft financing expenses and instead make lease payments. Lease payments would most likely be significantly lower than financing costs." For WestJet, replacing capital expenditures with lease liabilities can also improve credit ratings and financial metrics.

Why lessors profit from both operations and parts

FTAI's acquisition of the 10 off-lease 737-700s serves a different purpose: engine and component harvesting. The 737-700 is powered by CFM56-7B engines—the same engines found across the Boeing 737NG family worldwide. As these aircraft age or leave service, the engines become valuable not as whole assets but as sources of individual parts.

The CFM56-7B market remains substantial, with roughly 7,500 active units globally as of 2026. When an engine reaches the end of its economic overhaul life, lessors and parts traders disassemble it and sell individual components. Life-limited parts—pieces that degrade with flight hours and must be replaced—command premium prices in the used serviceable material market. A single high-pressure turbine stage 1 disk, for example, sells for $420,000 to $480,000 in the used parts market, roughly 30 to 50 percent less than new components but affordable for airlines conducting maintenance.

FTAI's aerospace products division, which supports maintenance and repair customers, uses this supply chain logic: acquire aged aircraft, extract engines and modules, and feed them into the aftermarket for airlines performing heavy maintenance checks. The CFM56 aftermarket is expected to remain a $12 billion to $15 billion annual market beyond 2030, a scale that makes parts harvesting economically rational even for aircraft no longer suitable for frontline service.

Why sale-leasebacks have become standard practice

Sale-leaseback transactions were once seen as emergency measures for cash-strapped carriers, but they have become routine fleet financing tools. The Irish Times reports that aircraft scarcity and extended delivery times have made these deals particularly valuable. As SMBC Aviation Capital's Conor Stafford explains, when airlines order years in advance and aircraft values rise before delivery, "they can sell the aircraft to a lessor for more than they are paying for it."

The arrangement serves lessors as well. With new aircraft facing years-long manufacturing backlogs, aircraft lessors can accelerate portfolio growth by acquiring used aircraft through sale-leaseback transactions rather than waiting for new production. FTAI's 2026 Strategic Capital vehicle, which financed the WestJet deal, follows the company's inaugural 2025 vehicle—which raised $2.0 billion of equity commitments and has committed approximately $6.0 billion of total capital across more than 300 aircraft, showing how rapidly capital flows into this segment.

The broad appeal reflects underlying economics: WestJet needs cash and lower operational costs as it retires older jets. FTAI needs aircraft inventory and engine supply. Both parties benefit without the airline liquidating its entire fleet or the lessor building aircraft from scratch. Sale-leasebacks have become a common way older aircraft transition to new operators and, increasingly, to parts suppliers.

The CFM56-7B aftermarket and component economics

The CFM56-7B, which powers Boeing 737-700s, 737-800s, and 737-900s, represents roughly half of the global CFM56 install base. As this population ages, engine overhaul and parts demand remain steady. Safe Fly Aviation's 2026 market report estimates 2,300 to 2,400 CFM56 shop visits annually through 2028, indicating sustained maintenance demand even as newer aircraft enter service.

Engine teardown economics depend on two factors: the engine's condition and the market price of the components inside. A heavy shop visit—full disassembly, LLP replacement and module restoration—costs $2.1 million to $2.8 million with 120 to 150 day turnaround times. For an engine on its last cycle, complete overhaul is uneconomical. Instead, lessors and parts traders disassemble the engine, salvage high-value components, and recycle the remainder. The economics work because even a single expensive life-limited part can justify the teardown cost, and several high-value pieces per engine compound the return.

This supply chain logic explains why FTAI acquired 10 whole aircraft as off-lease inventory. While WestJet continues flying 17 of the aircraft on lease, the 10 others become feedstock for FTAI's aftermarket operations. As the company stated, "the retiring aircraft will add CFM56-7B engines and modules to the exchange pool" for maintenance customers. For lessors, this dual-profit model—lease payments plus parts revenue—transforms aircraft retirement into a structured business process.