PW1100G SELECTED FOR INDIGO A320NEO ORDER [AS WE SAID THEY SHOULD] BUT DON’T CRY FOR CFM AS THEIR SHADOW IS GROWING IN THE EAST

Indian low cost carrier, IndiGo has selected Pratt & Whitney PW1100G engines to power its fleet of up to 180 A320neo aircraft currently on order with Airbus. P&W president David Hess remarked that the order was probably P&W’s largest in 50 years. The firm order represents 300 PW1100Gs with options for additional units. Most important of all though is that under the terms of the agreement, P&W will also provide aftermarket support for the engines.

IndiGo President Aditya Ghosh stated; “The PurePower engine’s benefits will allow us to make dramatic improvements in environmental performance with reduced emissions and significant savings in fuel consumption.”

This order means that the PW1000G engine series now has a backlog of over 1,200 including options. Not bad.  Our surveys suggest that the Mitsubishi Regional Jet, that other aircraft with P&W1000G power will also do well.

Don’t cry for CFM! Before the industry laments the failure of CFM to provide an all-new engine design like the GTF maybe we should all remember that it is the powerplant of choice for the C919. As Airline Economics will tell you in the next issue, this aircraft as a whole is a serious winner on cost, performance and supply date. If the market trusted COMAC that little bit more to deliver on its [as described by one airline CEO – “mad”] promises then this thing would be selling in spades.

Remember it is China – they have an ability to get things done on time and to spec no matter the cost, the C919 will be no different. This aircraft, ordered now during this quarter for an announcement at Paris, would mean extensive savings. Boeing should hurry and bring its ideas to market before the C919 gets rolling at full speed – this was the thought behind the A320neo – forget the CSeries banter from Airbus, it does not even compete with the A320neo – in reality manufacturer eyes are looking East!

All those paying attention will know that this is not new news. While most news services were telling you that Indigo was “leaning towards CFM” we told you that IndiGo was looking to the future and taking the lead from lessors to whom it hopes to have the option of sale and lease back on its A320neo orders. Where residual value is concerned you can do no more at this time than select the P&W engine for the A320neo. Those that wait to find out more about the CFM Leap X will miss out on lead customer deals with P&W and thus aircraft investors must weigh the options, we did within Airline Economics and we came out in favour of the P&W engine – Airlines and investors would have no more information than we obtained. If you have not discovered Airline Economics yet then maybe you should today by clicking on the link at the top of this newsletter or by asking for a hard copy. No other aviation publication is at this time giving correct opinion based upon facts to hand, we are changing that, stay with us and stay ahead of the news! In the next issue we will be looking at the DER/PMA and OEM aftermarket support packages. The information we have gained to date is reflected in this order from IndiGo and the OEMs are set to gain even more ground – So in what circumstance should an operator choose a certain package? We will let you know one way or the other what is best.

WTO RULING – NO WINNERS HERE?

The WTO has vindicated the view the United States has taken for the last 20 years, that the subsidies the Europeans give to Airbus dwarf anything that the US government does for Boeing. A panel of the Geneva-based WTO released its ruling yesterday on the European Union’s complaint that Boeing benefited from subsidies in violation of international trade rules.

The US and EU governments had received the confidential reports in January. The WTO partly upheld the EU complaint, saying that at least $5.3 billion in aid for the aircraft maker were illegal subsidies and recommended to the United States to withdraw programs and tax measures worth $2.7 billion. The US will appeal no doubt. But the WTO ruling last year, on the US complaint against Airbus, found the aircraft maker unit of EADS had received $20 billion in subsidized funding.

So the bottom line in this tit for tat affair? Airbus has received $20billion in aid against Boeing’s $5.3billion.

Illegal government subsidies to Airbus included:

• $1.5 billion in R&D subsidies,
• $1.7 billion in infrastructure subsidies,
• $2.2 billion in equity infusions, and
• $15 billion in launch aid (including $4 billion for the A380) – a subsidy that is unique to Airbus and is the most pernicious and market-distorting subsidy under the law.

You have to admit that although Boeing has had its fare share of help over the years it does not hold a candle to Airbus. They will all appeal and this will go on, as it has done, for at least another five years. What a waste of time and money.