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Old 27th Sep 2015, 16:34
  #524 (permalink)  
Chu Chu
 
Join Date: Feb 2009
Location: Virginia
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Aren't the engine costs pretty much a wash anyway? At least I'd assume that the "salvage" value of an undamaged engine is essentially the same as the cost of a replacement engine in similar condition.

Roughly speaking, something is economically repairable if the salvage value plus the repair cost is lower than the value of the item after repair. In other words, if increase in value due to repair is greater than the cost of the repair.

Here, a destroyed engine increases the repair cost of the aircraft, but decreases the salvage value by a similar amount -- so the sum should be about the same. It could matter who's paying for what, but in an efficient market it shouldn't.
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