One of the largest single purchases in the history of civil aviation, Air India Ltd.’s order for up to 500 aircraft from Airbus SE and Boeing Co. is being delayed by a standoff with the engine manufacturers powering the 737 Max.
According to people involved with the negotiations, CFM International, the joint venture between General Electric Co. and Safran SA, is hesitant to offer significant discounts on engines and maintenance that frequently go along with large orders. According to one of the sources who asked to remain anonymous because the discussions are private, the crux of the impasse is the hourly rates Air India would pay for repairs.
The latest generation of turbofans for Boeing and Airbus workhorse jets are experiencing earlier-than-expected maintenance, which the engine venture and its rival, Raytheon Technologies Corp.’s Pratt & Whitney subsidiary, are attempting to resolve. Because of this, it has become more difficult for the manufacturers to project revenues and costs over the engines’ lifetimes. GE Chief Executive Officer Larry Culp is taking this into account as the industrial conglomerate moves forward with a corporate split that will leave aviation as its core business.
Months have been spent negotiating an order for 400 narrowbody and 100 widebody aircraft that would enable Air India, the nation’s flag carrier, to improve service and dependability. A deal could potentially be revealed this month, according to some of the sources, after failing to reach an agreement by the end of last year. This would bring to an end about a year of negotiations with the planemakers, engine manufacturers, and a few leasing companies.
Tata Group, the parent company of Air India, feels a growing need to lock in the aircraft commitments due to the tightening supply of recently constructed aeroplanes. Travel is once again permitted into China, and the 737 Max was given the go-ahead to take flight after being outlawed for several years. The earliest slot for an A321 is now in 2029, according to Airbus, though customers occasionally earn faster deliveries if another handover fails.
