Farnborough Air Show

IAE celebrates 25 years in biz, braces for bumpy ride ahead

 - July 3, 2008, 4:42 AM

International Aero Engines comes to Farnborough celebrating the 25th anniversary of the landmark deal on March 11, 1983, between Rolls-Royce, Pratt & Whitney and Japanese Aero Engines to develop a brand-new engine–the V2500–to compete with the CFM56 to power the Airbus A320 family.

Since then, the consortium has racked up an impressive 135 customers in six out of seven continents, with more than 3,500 engines in service. IAE’s partners produce an engine every day and the order backlog stretches out to 2016.

“We have had amazing success and we’re looking forward to another 25 years of collaboration with our partners,” IAE president and CEO Jon Beatty told AIN. Asked if this means that IAE expects one day to find a place powering a Boeing airliner, he would say only, “We would want to secure a position on all available variants of the next-generation single-aisle aircraft.”

According to Beatty, the recent dramatic rises in the price of oil could dominate the agenda here at the Farnborough show, but with an order backlog equivalent to around seven full years of production, he insisted that IAE is well placed to weather any downturn.

“We have to manage that backlog aggressively, which means staying in close contact with our customers,” said Beatty. He believes there will be changes to the order book as the oil price surge begins to bite into airline balance sheets, but he predicted that widespread cancellations are unlikely. “But with oil at $135 a barrel and rising, it is certain some airlines will struggle,” he added.

According to Beatty, IAE is well positioned to power the next generation of single-aisle aircraft to follow the Airbus A320 and Boeing 737 because it can harness the best new technologies from both Rolls-Royce and Pratt & Whitney. The IAE partners are now investing several billion dollars to come up with the next evolution of the V2500. While the anticipated market entry of replacements for the A320 and Boeing 737 has moved back to between 2015 and 2020, the need to keep the existing engine competitive remains paramount. But, Beatty asked rhetorically, “how far will oil have to rise before a new product has to be offered?”

Beatty rejected suggestions that Pratt & Whitney’s stake in its geared turbofan complicates IAE’s position for the next generation of single-aisle aircraft. “Our shareholders have said we’re the preferred route to market. Talking about a particular configuration before the aircraft has been launched is not appropriate,” he concluded.

Meanwhile, the U.S.-based company has hailed the success of its V2500 Select-One upgrade. “This has had great market acceptance, is on time and on budget and enters service with Indigo in the third quarter of this year,” said Beatty.

In April, IAE signed up Singapore-based SilkAir to power as many as 20 A320s with the V2500 SelectOne in a deal potentially worth $580 million. Flight-testing of the new upgrade, which will yield a one-percent improvement in fuel burn and 20 percent increased on-wing time, began in February and lasted two weeks. The single engine was then joined by a second for another two-week program.

The results, said Beatty, “exceeded performance expectations.” IAE claims that Airbus’ figures of a 4-percent fuel burn advantage for the V2500 Select over the competing CFM56 will save airlines choosing the engine “millions of dollars.” IAE also claims 25-percent lower maintenance costs for the Select upgrade.

Clearly, IAE is in for the long haul, and it will be interesting to witness the competing arguments here at Farnborough this week as to how it and CFM plan to meet the fuel price challenge. The intense research now being conducted into future engine concepts will lead to a decision at the end of the decade on whether open rotors are a viable option. If they are, will Pratt & Whitney want to give up on its GTF, which it portrays as its preferred route to powering future single-aisle aircraft and which has already clocked up its first orders, in favor of Rolls-Royce’s open rotor or advanced conventional engine?

No doubt the partners are already discussing their options. With fuel prices showing no sign of cooling, these discussions are likely happening with their airline customers breathing down their necks for answers.