Bloomberg News

Airbus Faces Pressure on Engines as It Nears A330neo Decision

June 03, 2014

Airbus Group NV (AIR) should offer a choice of engines on a modernized A330 because a selection would make the wide-body aircraft more compelling, said potential customers as the manufacturer weighs the merits of an upgrade.

The European planemaker is nearing a decision on whether to invest about $1 billion on a refreshed A330 to significantly extend the life of a 20-year-old model. Aviation executives gathered at the annual meeting of the International Air Transport Association in Doha pushed Airbus to go ahead to cut fuel costs, among the biggest expenses of flying.

“We’re not shy about saying we’re taking a serious look at that airplane,” said Air Lease Corp. (AL:US) Chief Operating Officer John Plueger. “But one of the key differentiators for us is whether it’s going to have one or two engines suppliers. That’s important for all buyers.”

After releasing its A350 model into commercial service this year, Airbus will enter a long stretch without new programs, making the upgrade of existing platforms a key task. New engines would help rekindle demand for the A330 as Boeing Co. (BA:US) rolls out its more efficient competing 787 Dreamliner.

A refreshed A330 may see demand for as many as 1,100 units, said Plueger, coming close to the 1,400 orders secured so far for the existing model. While a choice of engines would make the airliner more attractive, it would also increase costs of manufacturing and complexity of certification for Airbus.

Lion’s Share

The A330, seating 250 to 300 passengers, competes with the Boeing 787, which is powered by either General Electric Co. (GE:US) or Rolls-Royce Group Plc engines. The Airbus comes with engines from either GE, Pratt & Whitney, or Rolls-Royce, which has won the lion’s share in recent years.

Rolls-Royce’s president for aerospace, Tony Wood, said last month that any decision to share in the investment “largely depends on the business case in terms of how many aircraft and what the solution would be.” GE would offer its GEnx model in use on the 787 and 747-8, said Rick Kennedy, a spokesman for GE Aviation, adding that “we don’t believe the market size for this program would warrant a new engine development.”

Airbus has beens successful with engine upgrades before, turning its A320neo into the fastest-selling aircraft in civilian aviation history. The narrow-body plane comes with a choice of two engines, unlike the competing Boeing 737 Max, which like its current iteration only offers one powerplant.

Airbus hasn’t made a formal decision on a new A330. John Leahy, the company’s chief operating officer, predicted that his company could sell more than 1,000 of the new model, saying at the IATA gathering that “economics always beats technological bells and whistles.”

“We always want an engine choice,” said Willie Walsh, the chief executive officer of British Airways parent International Consolidated Airlines Group SA. (IAG) “I’d be amazed if you met an airline CEO who said he’s happy not having a choice. That competition is good and healthy.”

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

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


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Companies Mentioned

  • AL
    (Air Lease Corp)
    • $36.76 USD
    • -0.24
    • -0.65%
  • BA
    (Boeing Co/The)
    • $124.67 USD
    • -2.04
    • -1.63%
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