On Monday afternoon at the Paris Air Show, jet engine maker CFM International said it signed the largest single jet engine order in history to supply fast-growing Indian carrier IndiGo with its LEAP-1A engines and services — a deal valued at more than $20 billion at list price.
That deal was a whopper but its dominance, at least in dollar terms, lasted barely a day. Demand for the fuel-efficient LEAP engine is running red-hot and on Tuesday, CFM beat that deal with a $23.1 billion engine and services agreement with AirAsia. The carrier will purchase 200 LEAP-1A engines to power the airline’s 100 Airbus A321neo jets. The deal also includes a service agreement for more than 800 LEAP-1A engines, the airline’s entire fleet.
“We have centered our long-term growth and expansion strategy around the larger Airbus A321neo; choosing the right engine to power those airlines is critical to the success of that strategy,” said Datuk Kamarudin Meranun, executive chairman of the AirAsia Group. “For us, the LEAP-1A continues to be the obvious choice. We have been operating it for nearly three years and are very happy. Our passengers like its quiet operation and we like the fuel-efficiency and very high asset utilization it gives us.”
AirAsia will purchase 200 LEAP-1A engines to power the airline’s 100 Airbus A321neo jets. The deal, valued at $23. 1 billion, also includes a service agreement for more than 800 LEAP-1A engines, the airline’s entire fleet. Image credit: Airbus. Top image credit: Tomas Kellner for GE Reports.
CFM, a 50/50 joint venture between GE and Safran Aircraft Engines, has been in the jet engine business since the 1970s. Its machines power 20 different aircraft for more than 600 operators around the world.
Its engineers built the LEAP engine for next-generation passenger jets developed by Airbus, Boeing and COMAC. The engine features 3D-printed fuel-nozzle tips and parts from space-age materials called ceramic matrix composites (CMCs), which help it save fuel, lower emissions and achieve other performance benefits.
CFM President and CEO Gaël Méheust said the LEAP engine has 15% percent better fuel-efficiency than its predecessor and best-in-class utilization — a key measure of (essentially) how often the engines are available to make money.
For example, the LEAP engine’s utilization rate, which has been at 96% since it entered service in 2016 — six points higher than the engine’s competitors. “You take the number of days the plane is available for commercial business and you divide it by the number of days of the year,” said Sébastien Imbourg, executive vice president at CFM. “The closer you are to 100%, the better you are.” That six-point advantage represents about 20 extra days of operation, or $2 million per airplane per year in extra revenue, according to banking firm UBS.