Engine parts supplier questions case for Airbus A380 upgrade

Thu Oct 23, 2014 8:43am EDT
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By Victoria Bryan and Tim Hepher

BERLIN/PARIS (Reuters) - The case for developing new engines for a sales-boosting upgrade to Airbus's A380 passenger jet has been called into question by a partner in one of the planemaker's engine suppliers.

A lean sales patch has increased pressure on Airbus (AIR.PA: Quote) to bow to the demands of its biggest customer - Dubai's Emirates airline - for new engines for the 525-seat A380, the world's largest airliner, to improve its efficiency after the recent launch of rival Boeing's (BA.N: Quote) 406-seat 777X.

"In principle, it's a challenging business case, whether it makes sense to develop an engine just for the A380, bearing in the mind the potential order book," Reiner Winkler, chief executive of MTU Aero Engines MTXGn.DE, told analysts.

"You've seen the volumes. That's a decision for Airbus and the OEMs (manufacturers). We don't see any risk for our existing order book," he said on a conference call on the German company's third-quarter earnings on Thursday.

MTU supplies an important set of parts for the GP7000 engines built for the A380 by Engine Alliance, a joint venture between General Electric (GE.N: Quote) and Pratt & Whitney (UTX.N: Quote).

Engine Alliance competes with Rolls-Royce (RR.L: Quote) to supply engines for the A380 double-decker, four-engined jet.

Emirates president Tim Clark told the Financial Times in July that his airline could buy between 60 and 80 A380s in addition to the 140 it has already ordered, provided that Airbus agreed to update the engines. He said this would give a 10-12 percent overall boost to the aircraft's efficiency.

Last month industry sources said Airbus was expected to agree to the revamp, though it faced a dilemma over timing. Delaying too long could inhibit a recovery of sales of its flagship product and moving too early could limit the amount of new technology available and strain engineering resources.   Continued...

An A380 Airbus arrives on the tarmac during the Airbus annual press conference in Colomiers, near Toulouse, January 13, 2014. REUTERS/Regis Duvignau