LDN - Business

Qatar Airways seeks engine guarantees for revamped Airbus order

[January 12, 2017] By Tim Hepher

PARIS (Reuters) - Qatar Airways is seeking strict guarantees as it talks to CFM International about supplying engines for a revamped order for Airbus narrow-body jets, which it expects to finalize "soon", its chief executive said on Thursday.

The Gulf airline has canceled four A320neo jets powered by alternative Pratt & Whitney <UTX.N> engines and expects to swap the overall aircraft order, which was originally for 50 jets, to larger A321neo aircraft.

CFM, a joint venture of General Electric <GE.N> and France's Safran <SAF.PA>, is locked in a fierce battle with Pratt & Whitney to supply engines for new Airbus medium-haul jets.

CFM exclusively supplies engines for the competing Boeing 737 aircraft, which Qatar Airways has also ordered.

Chief Executive Akbar Al Baker acknowledged Qatar Airways had received attractive prices when it originally ordered the new Pratt & Whitney engine, but said a decision on whether to keep those or switch to CFM for the upgraded A321neo order would depend on other guarantees.

"It is a factor, but what we decide will be based on what sort of guarantees we get on deliveries and at the same time performance," he told Reuters in an interview.

Qatar plans to take delivery of around 10 Airbus A350s and 6 Boeing 777s this year. It will also receive some Boeing 737s on behalf of Italy's Meridiana, where it hopes to tie up a deal to take a 49-percent stake around the end of the month.

It has told Boeing it is interested in taking earlier delivery of future 777-9 aircraft, because that program is ahead of schedule, Al Baker added.

Asked if Qatar Airways could take on delivery of aircraft for airlines in which it has stakes, like BA owner IAG <ICAG.L> and Latam, he said "why not," but added he believed those airlines would take their planes as planned.

[to top of second column]

He was speaking after opening a 1,000-square-metre business lounge at Paris' Charles de Gaulle airport, the airline's third premium lounge abroad after London Heathrow and Dubai.

It is building further lounges in Beirut and Bangkok and is negotiating lounge space in seven other airports, he said.

The expansion comes as Gulf airlines have seen premium yields suffering due to low oil prices and rising capacity.

Qatar Airways, which also plans to launch a new premium cabin at a trade fair in March, is investing an unspecified amount in new product to attract passengers "with the right yield" or average revenues, Al Baker said.

But he suggested fuel surcharges may soon be back on the agenda because of a recent rebound in oil prices.

"(Qatar Airways) had to lower (prices in 2016) because oil prices were going down, but now we are starting to put prices up because oil prices are starting to go up," he said.

"Soon, I think not only Qatar Airways but most of the airlines will re-introduce the fuel surcharges because they budgeted on lower fuel price and prices are now rising rapidly."

Oil prices have risen 20 percent in the last three months.

Al Baker said the airline had not seen traffic to France fall after recent attacks. It plans to serve Nice five times a week from July and announce a similar service to Lyon soon.

It continues to experience double-digit growth in passenger numbers, Al Baker added.

(Reporting by Tim Hepher; Editing by Sudip Kar-Gupta and Mark Potter)

Back to top