Singapore Air Show

IAE: V2500 Strong in Asia-Pac

 - February 14, 2012, 11:10 AM

International Aero Engines (IAE) will continue to build V2500 turbofans well beyond the middle of the next decade and production rates will continue to climb, according to president and CEO Ian Aitken.

IAE’s future was recently recalibrated by the announcement last year that Rolls-Royce would sell its equity and program shares to fellow consortium shareholder Pratt & Whitney for $1.5 billion. This was as part of a restructuring that would see the two companies enter a new partnership to develop an engine to power a future midsize aircraft.

Aitken said IAE established a particularly strong presence in the Asia Pacific region after having the foresight early on to place particular emphasis on this market. Forty-five percent of all the engines produced and sold by IAE have gone or will go to the region, compared with 30 percent to the Americas and 25 percent to Europe.

Well positioned in the ever-vital China market, IAE counts 17 operators in the People’s Republic, supported by 11 field offices, training and overhaul facilities and a joint-venture overhaul and repair facility with MTU Aero Engines. It also supports the Airbus A320 final assembly line in Tianjin. Next, IAE plans to open a technical training center in Guangzhou, where it has scheduled first classes to start this spring.

Here at the show, IAE is to announce that it has signed a $300 million deal with China’s ICBC Financial Leasing Co. to supply V2500 engines for its fleet of 15 new A320 series narrowbodies. ICBC expects deliveries to start in January 2013 and continue into 2015.

The V2500 competes directly with CFM International’s CFM56 engine for the A320’s propulsion requirement. In January the program reached a milestone when IAE delivered the 5,000th V2500, under the wing of SilkAir A320, at a ceremony at one of its assembly plants in Dahlewitz, Germany.

Singapore’s SilkAir counts as one of 74 customers in Asia, out of a total of some 200 worldwide. Of the some 500 engines the company sold last year, 63 percent are destined for customers in the Asia Pacific region, while roughly 50 percent of the 187 IAE-powered aircraft delivered last year went to Asia Pacific operators.

IAE’s backlog of around 2,000 engines accounts for more than four years of production as the company fast approaches an annual rate of 500 engines. Last year IAE built 430 V2500s and this year it plans to produce 470, said Aitken.

Notwithstanding the coming–in four or five years­–of the A320neo and 737 MAX, neither of which will use its engines, IAE projects a market for between 700 and 900 airplanes that would require an engine in the V2500’s class. “We’d like 50 percent of that,” said Aitken. This year alone, IAE expects operators will choose engines for between 300 and 450 aircraft already selected, he added.

Power by the Hour

Customers in the Asia Pacific that are signed on to IAE’s fleet-hour agreement include China Eastern, China Southern and Jetstar. “The reason I think they like it is they know what the pricing is going to be and what revenue they’re going to have to give up per hour, so they can plan better,” Aitken. “And they recognize that the engine manufacturer’s requirements are to keep the engines on wing as long as possible and make sure that the reliability is good, and so all our interests are aligned to make sure that happens.”

Three versions of the V2500–the A1, A5 and D5–together have now flown more than 100 million hours since certification in 1988. The so-called A engine has powered the A320, while the D variant served as the side-mount installation on the McDonnell Douglas MD-90. Plans call for the newest version of the engine–the E5–to power the new KC-390 tanker/cargo aircraft under development by Embraer, marking the V2500’s first military application and ensuring its market relevance well into the future.