Air France Talks on Airbus A350 Order Drag Out on Engine Dispute

Air France-KLM (AF) Group said it’s still negotiating an order for 25 Airbus SAS A350 aircraft, in a deal being complicated by a maintenance dispute with Rolls-Royce Plc (RR/), while Boeing Co. (BA) clinched its own accord with the airline.

Europe’s biggest airline announced plans in September to order 25 Airbus A350s and an equal number of Boeing 787s worth about $12 billion at list prices. The airline said today that it had completed the contract with Boeing last year, while talks continue with Airbus and U.K.-based Rolls-Royce, the only provider of engines for the A350 wide-body jet.

Air France had aimed to seal both contracts by the end of last year, and the company said resolving engine maintenance was the last remaining “significant” issue to tackle. Rolls-Royce has balked at Air France’s request to overhaul the Trent engines as part of the Airbus deal.

A Rolls-Royce spokesman said the company wouldn’t provide comment on commercial discussions. Air France spokesman Jean- Charles Trehan said “discussions are ongoing with Airbus and Rolls-Royce” to finalize the contract. Airbus also said discussions are continuing and and that the planemaker doesn’t publicly talk about negotiations with customers.

The French airline doesn’t service any Rolls-Royce turbines. Air France’s fleet is equipped solely with engines from GE or its joint ventures with Safran SA (SAF), and United Technologies Corp. (UTX)’s Pratt & Whitney, according to data from aviation research firm Ascend. GE lets Air France Industries service its existing models.

To contact the reporter on this story: Andrea Rothman in Paris at aerothman@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net