“Pratt Gets Order For 120 PurePower Engines, The First For New Airbus A320neo”

Pratt Gets Order For 120 PurePower Engines, The First For New Airbus A320neo

Posted: 08 Mar 2011 10:36 PM PST

The world's biggest aircraft leasing company on Tuesday became the first customer to select an engine for the more fuel-efficient version of the Airbus narrow-body jet called the A320neo when it ordered Pratt & Whitney's PurePower geared turbofan over CFM's competing Leap-X.

International Lease Finance Corp., a division of AIG, will get 120 Pratt engines for 60 planes. Pratt did not say where the Airbus engines, scheduled for delivery in 2016, would be built.

The order is a strong vote of confidence in Pratt's next-generation geared turbofan, which analysts predict will catapult the East Hartford-based jet engine maker back into a strong position in commercial aviation. Even if the engines aren't built in Connecticut, the PurePower engine, developed here, supports many salaried employees in the state — and with rising fuel prices, hopes are rising even further.

"Pratt & Whitney is delighted with this strong endorsement of the PurePower PW1100G engine," said Todd Kallman, president of Pratt & Whitney Commercial Engines & Global Services.

At the same time that International Lease Finance announced the order for 60 planes with Pratt engines, the company said that it would buy 40 more but did not commit to an engine for those planes.

Richard Aboulafia, an aerospace analyst with the Teal Group, said analysts think there's a good chance that Leap-X will end up getting the rest of the order.

"If [Pratt] had gotten 100 out of 100 that would be huge," he said.

But a 60/40 split would still be good news for Pratt. When Airbus first picked PurePower and Leap-X as the two options for the neo in December, Pratt said that it was committed to winning at least half of the orders. The combined order includes 75 A320neos and 25 A321neos, the largest version of the narrow-body Airbus jet.

Pratt is third in market share in the commercial engine market, and has not had a narrow-body engine in 13 years — and narrow-bodies are the largest segment in commercial aviation.

Nicholas Heymann, a Sterne Agee & Leach aerospace analyst, said: "You want continuity of your installed base. … Guess what, that goes all out the window when oil is going $100 a barrel."

Heymann said that the PurePower is not only further along in development than CFM's Leap-X, but "it has a huge advantage to the Leap-X over emissions and noise."

Airlines that lease from International Lease Finance include American, Continental, Delta, JetBlue, USAirways, Southwest and dozens of others around the globe — ILFC owns about 930 airplanes. Airlines lease almost 40 percent of their aircraft, and some analysts had speculated that lessors might be less likely to buy the A320neo because it might hurt the value of older A320s in their stables.

Analysts had also suggested that even though they believe the PurePower is more advanced in engineering, companies would choose to stick with competitor CFM because their mechanics already know that company's engines.

"With fuel prices on the rise, we'll see strong customer interest in saving fuel translate into orders," said Katy Padgett, a spokeswoman for Pratt's commercial engine division.

The announcement Tuesday follows a run of good news for Pratt, a division of United Technologies Corp. A vote in the House of Representatives turned momentum toward a Pratt monopoly for the Joint Strike Fighter, which is projected to include 3,650 engines over the life of the program. The Pentagon chose Boeing for its aerial refueling tanker, which means that Pratt will sell about 400 more engines. Both those engine runs are slated for production in Middletown.

Those victories followed a labor agreement in December in which Pratt and the Machinists union averted a strike by compromising on the closing of the Cheshire overhaul plant in exchange for job security for the remaining workers.

Although the PurePower test engines are being built in Middletown, Padgett said, the version that will go on Bombardier narrow-body jets will be made in Canada, although most of its parts will still be made in the United States. The company has 180 orders for the Bombardier engines. It also has 130 orders for engines for the Mitsubishi regional jet, and hasn't said where those will be made.

Aboulafia said it would be surprising if the Mitsubishi and Airbus PurePowers were made anywhere other than Quebec. "Splitting up production lines for the same engine is uncommon," he said.

"We're pleased to partner with Pratt & Whitney to power our new Airbus A320neo family fleet," ILFC CEO Henri Courpron said. "We look forward to extending the benefits of this new engine technology, which will improve fuel efficiency and address other environmental advantages for our customers."

The lessor also bought 33 Boeing narrow-body jets that will begin to be delivered in 2012, before the Airbus neos are ready.

An A320neo costs about $86 million, and the A321neo costs just over $100 million. Pratt has not said what it's charging for the new engines.

Pratt was once the world's top provider of engines for large commercial jets. But competition from chief rivals General Electric and Rolls-Royce, combined with Pratt's own failure to develop an engine for the wildly popular Boeing 737 narrow-body aircraft, cost Pratt prominence within the market segment.

Aboulafia said the geared turbofan is "a hell of a comeback on the narrow-body engines."

Courant staff writer Mara Lee can be reached at maralee@courant.com; follow her on Twitter at MaraLeeCourant.

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