Budget Airline IndiGo Orders 280 Jet Engines in $20 Billion Deal

(Bloomberg) -- Indian budget carrier IndiGo is ordering jet engines worth $20 billion from a joint venture of General Electric Co. and France’s Safran SA, a sign that the biggest buyer of Airbus SE A320neo planes is moving away from a rival engine by Pratt & Whitney following a series of glitches.

The order by IndiGo, operated by InterGlobe Aviation Ltd., for 280 engines to power Airbus A320neo and A321neo aircraft will include service and maintenance, the airline statement said. CFM International, the GE-Safran venture, will deliver the first engine by 2020.

The order is a blow to Pratt, a division of United Technologies Corp., which has grappled with delivery delays and groundings in India after spending $10 billion to develop its fuel-efficient geared turbofan for single-aisle jets. The deal strengthens CFM’s presence in India, the world’s fastest growing aviation market last year, with the local affiliate of Singapore Airlines Ltd. and state-run Air India Ltd. already using its turbines.

A move by IndiGo, Asia’s biggest budget carrier by market value, to CFM “would be a key reputational negative” for Pratt’s geared turbofan and could hurt future sales campaigns, Cowen & Co. analyst Cai von Rumohr said in a note to clients on May 30.

IndiGo, which controls almost half of the local market in India, had ordered 430 A320neo-family jets, and chose Pratt to supply turbines for the first 150 of them. The airline, founded by billionaires Rakesh Gangwal and Rahul Bhatia, is in talks with Airbus to place another “large” order to fuel an ambitious growth plan beyond the subcontinent, Chief Executive Officer Ronojoy Dutta said in an interview last month.

To contact the reporter on this story: Anurag Kotoky in New Delhi at akotoky@bloomberg.net

To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net, Ville Heiskanen, Unni Krishnan

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