Airline chiefs slam engine makers for delays at industry summit

By Allison Lampert, Gabriel Araujo, Rajesh Kumar Singh and Luciana Magalhaes

RIO DE JANEIRO, June 8 (Reuters) –  Commercial jet enginemakers faced renewed pressure from airline CEOs on Monday, as carriers warned that grounded aircraft and higher repair costs could persist for years.

The comments came during the International Air Transport Association’s annual meeting in Rio de Janeiro, where executives said engine problems remain one of the industry’s biggest constraints despite signs of improvement.

“Obviously there is dissatisfaction, and the way to measure that dissatisfaction is how many aircraft I have grounded today,” LATAM Brasil CEO Jerome Cadier told Reuters, adding that it has 12 single-aisle planes grounded due to engine issues.

While airline executives have long complained about engine problems, supply-chain improvements and actions taken by manufacturers like RTX’s Pratt & Whitney were expected to help keep more planes flying.

Some CEOs and lessors say there has been progress. But with the supply of engines and aircraft still tight, executives expect constraints to persist.

“Year-on-year we’re certainly seeing incremental improvement,” lessor Avolon CEO Andy Cronin said in an interview. “When you look at the global fleet overall it continues to be very tight, so we expect the strain on the market to continue for at least another couple of years.”

Hundreds of A320neo planes, ​the latest version of the Airbus ⁠single-aisle jet, have been grounded globally, partly due ​to long wait times for engine inspections and ​repairs, and after a manufacturing problem at Pratt weighed on the output of the fuel-efficient GTF engines.

Airlines also cited issues with engines made by Rolls-Royce and GE Aerospace for Boeing and Airbus planes.  

RTX and GE Aerospace both said they are investing heavily to increase repair and production capacity for their engines. RTX added it is working to improve the durability of the GTF.

Rolls Royce was not immediately available for comment.

“I think the biggest constraint for at least the next five years is going to be lack of engines,” United Airlines CEO Scott Kirby told reporters on Sunday.

“GE is working hard. I’ll put them at the top of the list,” Kirby said. “Pratt has had well-publicized challenges, but is sincere and genuine in their desire to want to fix them and to work with us. … The truth is the only one that I sort of have in my doghouse is Rolls.”

ENGINE ISSUES CREATE HIGHER COSTS FOR AIRLINES   

WestJet CEO Alexis von Hoensbroech said modern engines are generating higher maintenance costs, offsetting some fuel savings.

“There’s a lot of unscheduled maintenance that’s happening,” he said.  “The cost of ownership is significantly higher than what we had anticipated.”

Azul CEO John Rodgerson said some engines are not as durable as initially expected: “They’re just not lasting as long.” 

Italy’s ITA Airways, which will take a decision in weeks on whether to sue RTX’s Pratt over GTF problems, said the grounding of almost 20% of its fleet is complicating growth plans to Latin America.

ITA Airways CEO Joerg Eberhart said the carrier needs the grounded single-aisle aircraft to feed passengers to airport hubs for longer haul routes.  Cathay Pacific CEO Ronald Lam told reporters that about half of the 10 Airbus A320s operated by its low-cost HK Express subsidiary are grounded at any one time due to GTF engine issues.

DISCONNECT BETWEEN PERFORMANCE OF AIRLINES, ENGINE MAKERS

IATA CEO Willie Walsh said there is a disconnect between the financial performance of enginemakers, which have increased their margins by double digits, and airlines which he said have faced about $11 billion in additional costs due to supply-chain disruptions.

“They’ve done extremely well at a time of major disruption for the airlines. And I think that paradox really does need to be called out,” Walsh said. 

GE Aerospace CEO Larry Culp has defended the jet-engine industry’s pricing practices, saying they reflect the scale of investment required to develop and support complex propulsion systems.

For LATAM Brasil’s Cadier, suing doesn’t make sense, but he wishes enginemakers could get a taste of the pain that airlines are absorbing.

“Just as airlines are suffering, I would also like to see engine makers’ margins suffer.”

(Reporting by Allison Lampert, Gabriel Araujo, Luciana Magalhaes, Rajesh Kumar Singh and Joe Brock in Rio de Janeiro; Editing by Sanjeev Miglani)