IndiGo in $20 bn deal with CFM to replace Pratt & Whitney engines
18 Jun 2019
No-frills carrier IndiaGo, which has been hamstrung by erratic Pratt & Whitney engines used in its Airbus A320neo aircraft, has placed a $20 billion jet engine order with CFM International, dumping United Technology’s Pratt & Whitney and opting for its French-American rival.
CFM International is a joint venture of General Electric Co of the US and France’s Safran SA.
Under the deal, CFM, would supply more than 600 engines and spares for the A320neos it has placed orders with Airbus. CFM, will provide the 1LEAP-1A engines to power 280 A320neo and A321neo jetliners already on order from Airbus by IndiGo.
The Delhi-based budget carrier has placed orders for 430 Airbus planes of the A320neo family, of which the first 150 aircraft were to be powered by engines from United Technologies Corp’s Pratt & Whitney.
The Pratt & Whitney engines fitted on the A320neo aircraft are fuel-efficient, but has constantly been creating problems for the pilot and the carrier, with the result that IndiGo had to ground most of its A320neos ever since they entered service in 2016.
“The CFM LEAP engine will allow IndiGo to maintain its strong focus on lowering operating costs and delivering fuel efficiency with high standards of reliability,” Riyaz Peermohamed, chief aircraft acquisition and financing officer at IndiGo, said in a statement.
The first LEAP-1A-powered A320neo is scheduled to be delivered in 2020, IndiGo said in the statement, adding that the contract with CFM includes spare engines and an overhaul support agreement as well as a long-term service agreement.
CFM introduced its LEAP engines in India around 2016. It currently has 60 such engines operational in the country.
The order is a blow to Pratt, a division of United Technologies Corp, which has proposed a merger with defence contracting company Raytheon. The company had spend $10 billion to develop its fuel-efficient geared turbofan for single-aisle jets.
The deal strengthens CFM’s presence in India, the world’s fastest growing aviation market last year, with the local affiliate of Singapore Airlines Ltd and state-run Air India Ltd. already using its turbines.
IndiGo, founded by billionaires Rakesh Gangwal and Rahul Bhatia, now controls almost half of the domestic market. The airline had ordered 430 A320neo-family jets and is in talks with Airbus to place another “large" order to fuel an ambitious growth plan beyond the subcontinent, chief executive Ronojoy Dutta said in an interview last month.