Airbus to plan A320 engine options as rivals crowd market
PARIS: Airbus SAS said it plans to offer its A320 series of aircraft with an option of more fuel-efficient engines to help defend its stake of the single-aisle jet market.
The company will start delivering the new versions starting in early 2016 and predicted a market potential of as many as 4,000 aircraft over 15 years, the Toulouse, France-based manufacturer said in a statement today. Airlines can choose two new engine options on the jets, dubbed A320 NEO, or opt for the existing power plants, according to the release.
Airbus is seeking to extend the life of the top-selling A320, which entered service in 1988, before work begins on a new single-aisle jet that probably wouldn't be ready before the mid-2020s. Boeing Co. is considering an upgrade of its 737, and planemakers from Canada and China also are entering the market. Airbus studied the upgrade for more than a year, as it weighed the risk of deploying engineers needed on other aircraft.
"Finding the necessary resources for the A320 NEO wasn't exactly a walk in the park," Airbus Chief Executive Officer Tom Enders said in the statement. "We are confident that the A320 NEO will be a great success across all markets and with all types of operators, offering them maximum benefit with minimum change."
Airlines can order A320s and variants either with the new power plants, picking between Pratt & Whitney or the CFM International joint venture by General Electric Co. and Safran SA, or stick with existing engines that have powered the A320 since its creation. Variants of the plane include the larger A321, seating 180, and the smaller A319 for 124 passengers.
"It's a smart move, it's what airlines seem to want," said Richard Aboulafia, vice president of the Teal Group, a Fairfax, Virginia-based consultant. "Without this, they'd find themselves the highest-cost player on the market."
In studying the merits of the A320 NEO, Airbus, the planemaking unit of European Aeronautic, Defence and Space Co., had to consider the risk of committing additional engineers who may be needed to finish developing the wide-body A350 model due to enter service by the end of 2013.
Airbus is also still ramping up production of its A380 superjumbo aircraft.
Qatar Airways Ltd., already a major Airbus customer, backs the plan and and will likely be among the first buyers, CEO Akbar Al-Baker said in an interview last week. Airlines including Ryanair Holdings Plc and Southwest Airlines Inc., who are Boeing customers, have also demanded new engines.
Both the A320 and 737 are twin-engine models that seat about 125 to 185 people. List prices for each plane range from about $65 million to $95 million, depending on the version.
Airbus to date has won 6,745 orders for A320 series jets and delivered 4,453. When the company introduced the A320 in the 1980s, the jet included novelties such as fly-by-wire electronic handling, helping Airbus leapfrog Boeing in deliveries in 2003. US Airways Captain Chesley B. "Sully" Sullenberger III flew an A320 in his "miracle" Hudson River landing last year.
Aircraft leasing companies have met the proposal for new engines with different views. Steven Udvar-Hazy, chief executive of Air Lease Corp., said in October that the A320 NEO would offer only a "a very slim margin" for clients. International Lease Finance Corp. Chief Executive Henri Courpron said today that he backs the proposal.
"I think it's difficult not to embrace progress and technology," Coupron said, adding that rejecting the A320 NEO represented "a short term view in a very long-term business."
The A320 NEO's increased fuel efficiency of as much as 15 percent will reduce carbon emissions, with the potential to cut 3,600 tons of CO2 savings annually per aircraft, Airbus said.
The new engine option incorporates large wing-tip devices that help save fuel and increase range, dubbed "sharklets" by Airbus. Modifying the series will cost as much as $1.5 billion, a fraction of the $10 billion an all-new aircraft development program can cost, Airbus has said.
"We are pleased to see Airbus offer new engines with lower fuel consumption, better eco-efficiency and drastically reduced noise emission for the A320 family," Nico Buchholz, director of Lufthansa's fleet operations, said in a statement today. "If indeed the product offering is 15 percent more fuel efficient aircraft, then Boeing has to respond," he said.
Boeing continues to make improvements to its 737 and remains open to what the next approach will be, Jim Proulx, a spokesman, said yesterday in an interview.
"We have the option of offering a new engine for the 737," he said. "Customer feedback to date has been mixed, and on balance, has been against a new engine but it's still a consideration and it's a technically viable option. We are continuing to evaluate the potential of a new airplane." -Bloomberg