QF is likely to favour Rolls Royce, like Singapore Airlines, Virgin Atlantic and ILFC.
Decisive Qantas engine order soon, Rolls favoured
Thursday February 15, 6:34 AM EST
By Bradley Perrett, European aerospace & defence correspondent
LONDON, Feb 15 (Reuters) - Australia's Qantas Airways Ltd (QAN) will soon announce a decisive $1.2 billion order for aircraft engines, industry sources said, with Britain's Rolls-Royce Plc (RR) tipped as the likely winner.
The order, to power 12 Airbus (EAD)(BA) A380 superjumbos and 19 other planes, will probably determine which manufacturer becomes Qantas's leading engine supplier for decades to come.
A top industry executive told Reuters the airline had already chosen between Rolls and U.S. rivals Pratt & Whitney and General Electric Co (GE), but would not disclose the winner.
"They've decided, and the announcement should be imminent," the executive said.
Another source said Rolls-Royce had probably won the order.
Qantas's requirement for engines for both the A380s and a batch of A330s, which are about half as big, seems to favour Rolls-Royce, which alone can offer similar turbofans for the two types, easing maintenance costs.
On the other hand, Pratt and GE still lack a launch customer for the A380 engine that they are offering jointly -- the GP7200 -- so they may have offered extreme discounts to Qantas to get their programme going.
EARLY ENGINE COMPETITIONS BIG INFLUENCE
Pratt & Whitney executive vice president Robert Leduc said Pratt and GE needed just one customer for the launch of their engine, and he named the prospects as Air France (AIRF), Fedex Corp (FDX) and Deutsche Lufthansa AG (LHAG).
"We are very confident that we are going to get our launch at one of those next three, if not all of those next three customers," he said at a conference hosted by investment bank SG Cowen in New York on Wednesday.
Notably, Leduc did not include Qantas in that list.
Lufthansa has not ordered A380s yet.
Three customers so far have chosen Rolls-Royce's Trent 900 engine for A380s: Singapore Airlines Ltd (SIAL), its affiliate Virgin Atlantic Airways Ltd [VA.UL], and ILFC, a leasing unit of American International Group Inc (AIG).
The early competition for engines on a new aircraft model is particularly important, because it influences later buyers.
Engines are supplied under, effectively, their own prime contracts. Boeing Co (BA) and Airbus [ARBU.UL] separately contract to deliver the rest of the plane, the airframe.
Based on catalogue prices, engines usually account for about 20 percent of the total order and a much larger part of the plane's subsequent requirement for spare parts.
Qantas needs engines for 12 A380s, 13 A330s and six Boeing 747-400s.
Engines for the 747-400s are different again. Qantas uses mostly Rolls engines on its current 747s, but also has some GE units.
So Pratt, part of United Technologies Corp (UTX), would be an unlikely choice for the 747s.
Since Qantas is expected to buy many more A330s over the coming decade, the supplier of engines for that model is likely to get big batches of repeat orders.
©2000 Reuters Limited.
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