Avolon signs $2bn deal for aircraft engines

Irish lessor is buying 140 engines from CFM international to power 70 Airbus neo planes

Gaël Méheust (l), chief executive of CFM International, with Dómhnal Slattery, chief executive of Avolon.

Gaël Méheust (l), chief executive of CFM International, with Dómhnal Slattery, chief executive of Avolon.

 

Aircraft lessor Avolon signed a deal for 140 engines valued at $2 billion (€1.78 billion) at list prices to power a portion of its burgeoning Airbus A320 neo portfolio.

The Dublin-headquartered leasing company ordered 140 Leap-1A engines from CFM International, a US joint venture between GE Aviation and Safran Aircraft Engines.

Lessors or airlines generally buy a plane’s fuselage and then negotiate an engine order with one of a number of providers such as Rolls Royce, GE, CFM International, Safran or Pratt and Whitney.

Boeing and Airbus, the largest aircraft manufacturers, don’t make engines.

Britain’s Rolls Royce has been mired with issues on its Trent 1000 engines which power Boeing’s 787 Dreamliner. British Airways was forced to ground one of its Boeing 787 Dreamliners for about a year as a result of problems with the engines. Norwegian Air and Virgin Atlantic have also been affected by the problems.

Relationship

In any event, Avolon has a “long-standing relationship” with CFM, according to the company’s chief executive, Dómhnal Slattery.

“Our commitment to the Leap engine reflects our confidence in CFM’s track-record of designing and building world-class engines,” he said.

Avolon has been a CFM customer since its launch in 2010 and today owns a fleet of more than 290 CFM-powered aircraft. The agreement announced on Tuesday at the Paris Air Show represents Avolon’s largest engine order to date and CFM’s biggest engine transactions with a lessor for the Leap engine.

“The Leap-1A has proven to be an invaluable part of the Avolon portfolio and we look forward to working with them well into the future,” said Gaël Méheust, chief executive of CFM International.

Order book

Avolon, the world’s third largest aircraft lessor, has an order book of 240 aircraft from the Airbus A320 neo family of which 42 have been delivered. Following this agreement, CFM engines will power 105 of the aircraft. The lessor demonstrated its commitment to Airbus’s plane in December when it announced an order for 100 A320 neo aircraft valued at $11.5 billion at list prices.

Elsewhere, International Airlines Group ordered six Airbus A321 XLR for Aer Lingus, enabling the airline launch new routes beyond the US east coast and Canada. Aer Lingus is already taking eight A321 neo LR aircraft with the first delivery scheduled for this summer. The list price of the six aircraft is $852 million.

IAG also signed a letter of intent with Boeing for 200 B737 aircraft which would be used by Vueling, Level and British Airways.