American Airlines Group Inc. (AAL) is poised to buy $2.6 billion of jet engines from a General Electric Co. (GE) venture that competes with United Technologies Corp.’s Pratt & Whitney, two people familiar with the deal said.
The 200 Leap-1A engines would outfit 100 Airbus Group NV (AIR) A320neos that American agreed to buy in 2011, said the people, who asked not to be named because the talks are private. The purchase is set to be announced next week at the Farnborough International Airshow in England, the people said.
CFM, a joint venture of GE and France’s Safran SA (SAF), vies with Pratt to provide upgraded engines for the neo, the newest version of Airbus’s top-selling single-aisle jet family. The Leap-1A engine carries a list price of $13 million.
A deal with American, the world’s largest carrier, would give CFM a boost while dealing a blow to Pratt, which is already fielding questions over its new geared turbofan engine. A GTF engine failed in May during ground trials for the Bombardier Inc. (BBD/B) CSeries jet, halting flight tests while the planemaker and Pratt investigate.
Martha Thomas, a spokeswoman for Fort Worth, Texas-based American, and Jamie Jewell, a spokeswoman for CFM, declined to comment on the airline’s engine choice.
American’s neos are among 260 Airbus planes the carrier ordered three years ago, along with 200 Boeing Co. 737s, to replace older, fuel-guzzling narrow-body aircraft. The airline expects to get its first neo deliveries in 2017.
Reuters reported last week that American and CFM were close to reaching an agreement.
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