Air India’s Mega Jet Deal with Airbus, Boeing Held up by Engine-Cost Debate

Air India Ltd orders 500 aircraft from Airbus SE and Boeing Co is being held up by an impasse with engine makers powering the 737 Max dragging out one of the biggest single purchases in the history of civil aviation. CFM International, the General Electric Co., and Safran SA Joint venture are reluctant to offer big discounts on engines and maintenance that typically accompany mega orders. The deadlock centers on the hourly rates Air India would pay for repairs.

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Air India’s Mega Jet Deal with Airbus, Boeing Held up by Engine-Cost Debate- Key Points

• The engine venture and its rival, Raytheon Technologies Corp’s Pratt & Whitney division are grappling with earlier-than-expected repairs on the latest generation of turbofans for Boeing and Airbus workhorse jets.
• It has made it tough for the manufacturers to model revenue and costs over the lifespan of the engines.
• A key consideration for GE Chief Executive Officer Larry Culp as the industrial conglomerate moves forward with a corporate breakup that will leave aviation as its core business.
• Air India has spent months negotiating an order of about 400 narrowbody and 100 widebody jets that would allow the country’s flag carrier to upgrade service and reliability.
• A representative for CFM declined to comment noting the confidentiality of customers’ conversation.
• Dealing with aircraft commitments is gaining urgency for Air India parent Tata Group because supply for newly built jetliners has become increasingly constrained.
• China is reopening to travel, and the country allowed the 737 Max to fly again after being blocked from the market for several years.
• Airbus has informed that the earliest slot for an A321 is now in 2029 though customers can sometimes score earlier deliveries if another handover falls through.
• CFM is the sole supplier of engines for the Boeing 737 aircraft family, while Airbus’s A320 can be powered by either CFM or Pratt Models.

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