According to sources familiar with the negotiations, CFM International, a joint venture between General Electric and Safran, is hesitant to provide large discounts on engines and maintenance services, which are typically included in mega orders. The stalemate reportedly centers around the hourly rates that Air India would pay for repairs, according to one of the sources who wished to remain anonymous as the talks are confidential, Bloomberg news agency reports.
CFM International and its rival, Pratt & Whitney, are facing unexpected repairs on the latest generation of turbofans for Boeing and Airbus jets. This has made it more difficult for the manufacturers to predict revenue and costs over the lifetime of the engines, which is a crucial factor, according to GE's CEO Larry Culp as the company continues with its corporate restructuring, making aviation its core business.
Air India, which has been acquired by the Indian conglomerate, has been in talks for several months to place an order for around 400 narrowbody and 100 widebody jets with Boeing and Airbus, which would enable the airline to arise from its ashes. The negotiations, which have involved the airline, aircraft manufacturers, engine manufacturers, and a few leasing companies, have taken around a year to conclude.
Tata Group, the parent company of Air India, is facing growing pressure to secure its aircraft commitments as the supply of new jetliners becomes increasingly limited. The Chinese market, which has recently reopened for travel, is further complicating matters as the 737 MAX is once again allowed to fly after being banned for several years. Airbus has announced that the earliest delivery date for an A321 is 2029, though customers may be able to secure earlier deliveries if another order is canceled.
CFM International is the exclusive supplier of engines for the Boeing 737 aircraft family, while Airbus' A320 can be powered by either CFM or Pratt models. Air India's management has reportedly completed the majority of work on the Airbus portion of the deal but is still finalizing details, including the model split, according to sources.
Steven Udvar-Hazy, the chairman of aircraft leasing company Air Lease Corp., announced at a recent conference that the deal includes a mix of Airbus 321neo and Boeing 737 MAX models, as well as the Boeing 787, 777X, and some 777 freighters, in addition to the Airbus A350 for widebody aircraft.
