By Jinjoo Lee

In the battle for AI dominance, every engine of the economy is getting recruited into the fight -- including jet engines.

Jet engine leasing and repair company FTAI Aviation plans to start selling a modified version of the engine used in the Boeing 737 to power data centers this year. Its shares are up roughly 42% since it announced the power turbine business, which Jefferies estimates could add $750 million of earnings before interest, taxes, depreciation and amortization a year. That represents about 52% of the Ebitda that analysts polled by FactSet expected FTAI to bring in this year before it announced the power business.

Others pursuing this conversion include private equity-backed ProEnergy, which sells natural gas turbines that are adapted from the same engine that powers the Boeing 747. Aircraft startup Boom Supersonic in December said that it will start selling a modified version of its engine as a natural gas power turbine. AI data center startup Crusoe is its first customer and is expected to get its turbines in 2027.

Jet engines are a natural fit. Power equipment giants GE Vernova, Siemens Energy and Mitsubishi Heavy Industries already sell power turbines -- known as aeroderivatives -- that are modeled after these very jet engines. Aircraft engine companies such as GE Aerospace, Howmet Aerospace and Woodward also sell land-based aeroderivative turbines or components.

Yet many of these incumbents have yearslong wait lists for power turbines, opening up an opportunity for new market participants. In an interview, FTAI Aviation's President David Moreno said it takes the company 30 to 45 days to convert a jet engine to a power-generating turbine. He said designing the turbine, which kept as much of the original jet engine features as possible, was a roughly 18-month undertaking. The company is well-positioned to tap this hot market: It is one of the largest owners of the CFM56 engine, the bestselling one in commercial aviation.

There are two main modifications to convert an aircraft engine to a land-based natural gas turbine for power generation, according to Mark Axford of Axford Turbine Consultants. One is replacing the fuel nozzles to utilize natural gas instead of jet fuel. The other is replacing the large fan on the front of the flight engine with a much smaller fan that is better suited for power generation.

FTAI's Moreno said the company can remanufacture jet-engine parts with a few years of remaining life for use in power turbines, where they can operate for many additional years. Narrow-body jet engines experience higher stress from repeated takeoffs and landings. Power turbines can run as peakers -- turning on only when demand surges -- or continuously as baseload. Either way, they accumulate less wear and tear.

So far, the big power equipment manufacturers have brushed aside concerns that these new players would erode pricing power for their large, heavy-duty turbines. "We don't really view those smaller units to be in competition," GE Vernova Chief Executive Officer Scott Strazik said in the most recent earnings call, noting that "when you're underwriting 20-year business cases, efficiency matters a lot."

Heavy-duty turbines are the most fuel-efficient design among natural gas-power generating engines, according to a report from Thunder Said Energy. But those turbines have gotten a lot more expensive and have growing wait lists. Both FTAI and Boom Supersonic said some data center customers are considering using their products as the primary, long-term power source. They said their turbines can be configured as combined cycle, which means a steam turbine is added to capture waste heat. This improves efficiency compared with the "simple cycle" configuration, which is the way aeroderivative turbines are typically used.

So far, FTAI has said it expects to be able to deliver about 100 turbines, or 2.5 gigawatts, a year. Boom Supersonic said its goal is to have 4GW of manufacturing capacity or more annually by 2030. Both companies "still need to prove out the product development, manufacturing ramp up and customer appetite for the new turbines, but they would boost the supply outlook for the industry," analysts at Morgan Stanley said in a research note. The bank estimates that there was roughly 47 GW of global annual gas turbine manufacturing capacity between 2023 and 2025.

Technically, there is potential for more capacity. Jefferies equity analyst Sheila Kahyaoglu said about 1,600 commercial aircraft engines are retired every year. If a third of those engines get converted into turbines the size of FTAI's turbine product, that would represent about 13 GW of capacity, or more than a quarter of the existing global natural gas turbine capacity estimated by Morgan Stanley. The U.S. Energy Information Administration estimates that there are enough engines in retired military aircraft to convert to as much as 40 GW of power generating capacity, though this figure is very theoretical.

The rejiggering of manufacturing capacity has potential ripple effects. For one, if even more jet engine parts get diverted to produce power turbines, that could worsen the shortage in the jet-engine market, which is already very tight.

Second, it could eventually diminish the power equipment makers' pricing power. The three big manufacturers -- GE Vernova, Mitsubishi Heavy Industries and Siemens Energy -- have roughly 80% of the gas turbine market, according to Morgan Stanley. These manufacturers are likely holding back on bigger capacity additions to avoid a repeat of prior periods of oversupply, according to a report from Thunder Said Energy, which notes that expanding gas turbine manufacturing is "surprisingly inexpensive." Other engine manufacturers, including those that produce marine and other heavy-duty types, can repurpose capacity to make more power engines "with only minor investment," the report added.

AI-obsessed tech giants are planning to spend more than $700 billion in capital expenditures this year. The lure of that cash pile will generate a lot of creativity in the power sector.

Write to Jinjoo Lee at jinjoo.lee@wsj.com

(END) Dow Jones Newswires

February 17, 2026 05:30 ET (10:30 GMT)

Copyright (c) 2026 Dow Jones & Company, Inc.