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Safran CEO sees limited room for rival engines on new Boeing jet

Safran CEO sees limited room for rival engines on new Boeing jet
FILE PHOTO: Safran Chief Executive Philippe Petitcolin delivers speech during the inauguration of the Safran Aircraft Engines plant in Queretaro, Mexico, February 21, 2018. REUTERS/Edgard Garrido/File Photo   -   Copyright  Edgard Garrido(Reuters)
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By Tim Hepher

HAMBURG (Reuters) – Safran <SAF.PA> expects Boeing <BA.N> to decide next year which engines will power its proposed new mid-market airliner, but the chief executive of the French jet engine manufacturer voiced reservations about there being room for more than one supplier.

The industry has been debating for months whether the market is large enough to justify a new plane and if so, whether it would also be big enough to absorb two competing engines.

“It is harder to build a business case when their are two (engine) sources,” Safran Chief Executive Philippe Petitcolin said at the opening of a new CFM casing plant in Hamburg, adding it would be “harder to justify a double source”.

Engine choice is one of the biggest milestones Boeing faces before deciding whether to go ahead and launch its first new jet in over a decade – a decision it expects to make next year.

CFM International, which is co-owned by Safran and General Electric <GE.N>, is expected to compete with Rolls-Royce <RR.L> and United Technologies <UTX.N> unit Pratt & Whitney to supply engines for the new jet, which would enter service in 2025.

Aircraft manufacturers sometimes offer airlines a choice of engine to promote competition and make it easier to fit with existing fleets, but that depends on engine makers seeing a big enough market to justify their costs.

CFM has an exclusive deal to supply engines for Boeing 737 narrow-body jets and competes with Pratt & Whitney on the Airbus A320 family, giving it by far the largest share of the single-aisle fleet that dominates global jet production.

Since the new Boeing jet would compete in part with the larger models of single-aisle jet, CFM is widely seen as more cautious than its rivals about disturbing the status quo.

Many in the industry expect it to take part if Boeing goes ahead, especially if Boeing only chooses one supplier.

In July, GE Aviation CEO David Joyce said the company had not yet managed to reconcile the various market forecasts for the middle of the jetliner market.

The business case for engine manufacturers would depend on how many variants Boeing plans to offer, he said.

Sources say Boeing’s mid-sized jet would come in two variants seating 225-265 people and be targeted at what Boeing sees as a gap between the largest single-aisle jets like the Airbus A321 and wide-body jets like its own 787.

Industry publication Air Current reported last month that engine companies would submit bids to Boeing at the end of December, following several rounds of discussions.

In a further sign that preparations are speeding up, two industry sources said Boeing has also started talking to suppliers of other equipment for the jet.

(Reporting by Tim Hepher; Editing by Alexander Smith)

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