GE Engine Venture Said to Win First Leap-X Orders on A320neo

General Electric Co. (GE)’s engine venture won its first orders for the new Leap-X model on the upgraded A320 jets made by Airbus SAS, the world’s biggest commercial planemaker, people familiar with the plans said.

International Lease Finance Corp. will put CFM International’s Leap-X on 40 A320neo planes on order and Virgin America Inc. will use it on 30 of the twin-engine jets, said the people, who didn’t want to be identified because the details aren’t yet public.

CFM, the 50-50 joint venture of GE and France’s Safran SA (SAF), probably will announce several orders around the time of the Paris Air Show this month, the people said. Airlines’ purchases would signal confidence in the fuel-efficient Leap-X after Pratt & Whitney’s geared turbofan model won the first wave of orders earlier this year to equip Airbus’s new narrow-body jet.

While CFM previously won Leap-X orders for China’s C919 narrow-body jet, the deals with ILFC and Virgin America would be the first to put the engine on an A320neo. The Airbus jet competes with Boeing Co. (BA)’s 737 in the single-aisle jet market, the biggest segment of the global airline industry.

Company Responses

A CFM spokeswoman, Jamie Jewell, declined to comment. ILFC Chief Executive Officer Henri Courpron and Virgin America CEO David Cush also declined to comment through spokesmen.

ILFC is the Los Angeles-based aircraft-leasing unit of American International Group Inc. (AIG), the insurer that received a government bailout, and Virgin America is the Burlingame, California-based start-up carrier partly owned by U.K. billionaire Richard Branson.

GE slid 51 cents, or 2.6 percent, to $19.13 at 4:15 p.m. in New York Stock Exchange composite trading, while Safran fell 5 cents to 28.20 euros in Paris.

The Leap-X relies on improvements in the engine’s core, or hot section, to help cut fuel consumption, while Pratt’s geared turbofan uses a gear to slow the outer fan of the engine, adding efficiency and reducing noise. Fairfield, Connecticut-based GE is the world’s largest maker of jet engines. Pratt & Whitney is a unit of Hartford, Connecticut-based United Technologies Corp. (UTX)

Neither CFM nor Pratt has released a list price for the new models.

Engine makers typically make little no profit on the turbines, instead locking in a stream of revenue over time through parts and service contracts. Selling more engines boosts the chances of turning a profit on the power plants themselves.

CFM’s current base models, called the CFM56, have the most engines in service globally, powering the 737 and Airbus’s A320 family.

To contact the reporters on this story: Rachel Layne in Boston at rlayne@bloomberg.net; Mary Jane Credeur in Atlanta at mcredeur@bloomberg.net

To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net

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