Monday, February 12, 2018

Airbus’s Most Important Aircraft Can’t Shake Its Teething Problems

Airbus's most important aircraft just can’t shake its teething problems.

The European manufacturer has been forced to suspend some deliveries of its A320neo jet following another issue with the engines supplied by Pratt & Whitney. IndiGo, the Indian low-cost airline that’s the plane’s biggest customer, on Sunday disclosed three in-flight shutdowns, and said pilots have had to turn back before taking off in three other instances -- an alarming new problem for a Pratt power plant that’s been hobbled by glitches from the start.

Replacing the engines is the “best possible precautionary measure” to avoid further mishaps, IndiGo spokesman Ajay Jasra said Sunday.

As many as 11 of the 113 Pratt-powered A320neos delivered by Airbus have been grounded, according to people familiar with the matter, with 43 in-service engines affected in total. All are from the most recent batches to come off the engine-maker’s production line. Further turbines at both Airbus and Pratt facilities are affected, they said. Three of the grounded planes are at IndiGo, the airline said. Airbus declined to identify the other airlines.

More Fuel-Efficient

It’s impossible to overestimate the importance of the A320 for Airbus. It put the European planemaker on the map three decades ago, allowing the company to go from a speck in Boeing’s rear-view mirror to powerful equal in what has become a de-facto duopoly in the global civil-aircraft market. Airbus churns out more than 50 of the aircraft each month, and the promise of the neo with its more fuel-efficient engines turned the model into the fastest seller in commercial aviation history, forcing Boeing to respond with a refreshed 737.

Airbus has traditionally offered two engine options on the A320, and the company maintained that approach on the neo. Customers can choose between the Pratt & Whitney model and a type built by the CFM joint venture between General Electric Co. and France’s Safran for Pratt, the introduction of the two-year-old neo was a chance to solidify its position in the lucrative market for single-aisle planes, which form the backbone of most global airline fleets.

Durability Issues

Pratt, a unit of United Technologies Corp., invested $10 billion to develop the geared turbofan, now its most important product. The latest issue undermines its efforts to move past earlier snags, including a cooling problem that marred its commercial introduction in early 2016, and subsequent durability issues and delivery delays. Pratt said Friday that the problem was isolated to “a limited subpopulation” of the engines, and had to do with a “knife edge” compressor seal.

Shares of parent United Technologies fell 1.9 percent on Friday, the biggest slide of any member of the Dow Jones Industrial Average, while Airbus dropped 2.3 percent the same day in Paris. Shares of InterGlobe Aviation Ltd., which operates IndiGo, declined as much as 1.7 percent in Mumbai on Monday.

Compensation Costs

If the latest problem leads to penalty payments to IndiGo and other customers, it wouldn’t be the first time Pratt was on the hook financially. Greg Hayes, chief executive officer of United Technologies, said last April that Pratt incurred costs to retrofit the engines to address durability issues, and related to “helping the airlines through some of this.” He didn’t specify the exact amount, but he said “it’s not material.”

The early glitches at Pratt led many customers to wait on the sidelines: The competing CFM engine outsold the GTF on the A320neo by a 10-to-1 margin in early 2017. Pratt won several key orders late in the year as the earlier issues subsided, and executives at Airbus and United Technologies said the manufacturer seemed to be moving on from a difficult chapter.

ANA Holdings Inc., Hong Kong Express Airways Ltd. and Go Airlines India Ltd. are some of the other carriers in the region that have A320neos with Pratt engines in their fleet.

While Pratt works on a fix, IndiGo said it will take delivery of older, less-efficient A320ceos to fuel its growth. Pratt is also working closely with IndiGo to provide replacement engines, having replaced 69 of them in the past 18 months.

IndiGo said Saturday that it canceled some flights after the European Aviation Safety Agency warned of a new issue with the engines and said it was investigating. The regulator said Friday that operators with planes using two affected engines must stop flying them within three flight cycles. Aircraft with one affected engine are restricted from certain extended-range flights.

“Airbus and Pratt are working in close cooperation and will be swiftly communicating on the way forward to regain normal operations and resume aircraft deliveries,” spokesman Jasra said.

(Anurag Kotoky, Benjamin D Katz, and Rick Clough - Bloomberg News)

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