Safran Considers India Engine Repair Plant After Mega Airbus Order
(Bloomberg) -- France’s Safran SA is considering building an engine-repair facility in India, after winning its biggest-ever turbine deal last month with joint venture partner General Electric Co.
The project would be aimed at customers of the venture, CFM International, which was selected by IndiGo, the nation’s top airline, to supply engines for 310 new Airbus SE A320-family aircraft.
A final decision and the timing of any project will be linked to global industry recovery and demand for engine maintenance, repair and overhaul services after the pandemic, a Safran spokesperson said in response to queries from Bloomberg News.
CFM has shortlisted the southern Indian city of Hyderabad and an under-construction airport near the capital of New Delhi as two possible locations, people familiar with the matter said, asking not to be identified because the details are private.
The facility would bolster India’s aviation infrastructure, providing a platform for further growth in a key long-term market for Airbus and U.S. rival Boeing Co. Before the pandemic, carriers in the country were ordering hundreds of new jets -- the May order added to CFM’s existing $20 billion contract with IndiGo to power 280 jets with its LEAP-1A engines.
A spokesman for India’s civil aviation ministry didn’t immediately respond to requests for comments.
IndiGo, operated by InterGlobe Aviation Ltd., is the world’s biggest customer for Airbus’s best-selling A320neo-family of jets, having ordered 730 of the models.
India’s rising middle class, and a plethora of competition, has made it a robust target for airlines as millions take to the skies for the first time. Aviation grew at a rate of more than 10% annually for a decade before Covid hit, according to the government. The International Air Transport Association expects the country to become the third largest air-transport market in the world by 2026, catapulting from seventh in 2018.
Although the pandemic has limited air travel globally, demand is starting to spring back in some places as more people are inoculated and infection rates ebb.
Despite the size and potential of the market, India lacks adequate infrastructure for MRO activities, and carriers are often forced to send their aircraft to Sri Lanka, Dubai or Singapore for major work. While MRO work in India generates almost $1 billion in annual revenue, local factories don’t usually work on engines, which are serviced overseas, according to Pulak Sen, secretary general of the MRO Association of India.
Safran in 2019 announced a 36 million-euro ($43 million) plant to manufacture LEAP engine parts in Hyderabad.
The company is finalizing an investment plan of 100 million euros for the airport at Jewar, about 80 kilometers (50 miles) southeast of New Delhi’s main hub, the people said.
Safran, which has almost 600 engines currently in service with Indian airlines, declined to comment on its investments.
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