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Budget airline IndiGo orders 280 jet engines in US$20b deal
[NEW DELHI] Indian budget carrier IndiGo is ordering jet engines worth US$20 billion from a joint venture of General Electric and France's Safran, a sign that the biggest buyer of Airbus SE A320neo planes is moving away from a rival engine by Pratt & Whitney following a series of glitches.
The order by IndiGo, operated by InterGlobe Aviation, for 280 engines to power Airbus A320neo and A321neo aircraft will include service and maintenance, the airline statement said. CFM International, the GE-Safran venture, will deliver the first engine by 2020.
The order is a blow to Pratt, a division of United Technologies, which has grappled with delivery delays and groundings in India after spending US$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 and state-run Air India already using its turbines.
A move by IndiGo, Asia's biggest budget carrier by market value, to CFM "would be a key reputational negative" for Pratt's geared turbofan and could hurt future sales campaigns, Cowen & Co analyst Cai von Rumohr said in a note to clients on May 30.
IndiGo, which controls almost half of the local market in India, had ordered 430 A320neo-family jets, and chose Pratt to supply turbines for the first 150 of them. The airline, founded by billionaires Rakesh Gangwal and Rahul Bhatia, is in talks with Airbus to place another "large" order to fuel an ambitious growth plan beyond the subcontinent, Chief Executive Officer Ronojoy Dutta said in an interview last month.