Bloomberg News

AirAsia Says GE, Safran No Shoe-In to Power Latest Airbus Jets

December 21, 2012

AirAsia Bhd. (AIRA) said it will run a contest to pick an engine supplier for its latest crop of Airbus A320 planes rather than automatically select its normal supplier, a General Electric Co. (GE:US) and Safran SA (SAF) venture.

Pratt & Whitney will get the opportunity to pitch for the contract to power 100 planes ordered earlier this month, said Anaz Ahmad Tajuddin, the airline’s head of engineering for Asia.

AirAsia, the region’s biggest discount airline, and Airbus’s biggest A320 customer in Asia, unveiled an order for the jets earlier this month. The contract includes 36 current- generation A320s and 64 fuel-efficient A320neos.

“We have to look at fuel savings provided by both engine suppliers and maintenance costs: those are the two drivers,” said Tajuddin. The airline will make a decision by the end of January, he said.

The CFM International partnership of GE and Safran is the current supplier for all A320s that have been ordered by AirAsia. It chose GE over United Technologies Corp. (UTX:US)’s Pratt & Whitney for the first 200 Airbus A320neos the airline ordered. Tajuddin said the airline is running a contest to get the best offer.

“We’ve had CFM the last seven years, we know the engine, we know the issues, and CFM wouldn’t want to lose the deal,” he said. “I’d say we’re in a good position” in running a contest.

The A320neo is a newer version of the A320 that will offer more fuel efficient engines from late 2015.

AirAsia competes with the budget or regional arms of flag carriers including Singapore Airlines Ltd. and Qantas Airways Ltd. The airline, based in Sepang, Malaysia, has set up ventures in the Philippines, Japan, Thailand and Indonesia, and also faces growing competition from emerging discount carriers seeking to win passengers who demand low-cost travel options.

To contact the reporter on this story: Andrea Rothman in Toulouse at aerothman@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net


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