Akasa Air inks $4.5-bn pact to buy CFM engines for its Boeing planes

Ace investor Rakesh Jhunjhunwala-backed Akasa Air on Wednesday announced signing an agreement to purchase CFM LEAP-1B engines to power its Boeing 737 MAX airplanes and the overall deal is estimated to be worth $4.5 billion.

The announcement comes a day after the upcoming ultra low cost carrier said it would buy 72 Boeing 737 MAX planes from Boeing Co.

With this purchase and services agreement, Akasa Air will have from day one of its operations an innovative and comprehensive maintenance programme delivered by CFM, the airline said in a statement.

The pact was signed with CFM at the ongoing Dubai Airshow. The deal, which includes spare engines and long-term service agreement, is estimated to be worth $4.5 billion at list price.

At current exchange rate, the amount translates to more than Rs 33,000 crore

“We are pleased to partner with CFM International as we embark on an exciting journey to launch the greenest, most affordable and most dependable airline in India.

“Our partnership with CFM will ensure that we adhere to the world’s highest standards of maintenance and deliver the industry’s best technical dispatch reliability,” Akasa Air CEO Vinay Dube said.

According to him, the high-performance LEAP-1B engine will support Akasa’s tech-driven culture by enabling real-time engine monitoring and predictive maintenance planning.

“With this agreement, we now have the foundation to ensure the most competitive and reliable operations in our fast growing market,” Dube added.

Akasa Air, owned by SNV Aviation, is expecting to start flying next year. It has already received a no-objection certificate from the civil aviation ministry.

“We are proud to develop a strong relationship with Akasa and play a key role in the launch of their operations, by providing them with the industry-leading asset utilisation, fuel efficiency, and overall cost of ownership,” Philippe Couteaux, Executive Vice President of Sales and Marketing for CFM International, said.

CFM delivered the first CFM56 engines in the early 90s. Since then, the company has been developing a trustful relationship with major Indian airlines and playing a key role in Indian domestic market continuous growth, according to the release.

To date, nearly 600 engines are operated by airlines from the Indian subcontinent and more than 1,700 LEAP engines are on order.

Akasa Air had placed an order for 72 Boeing 737 MAX jets on Tuesday, valued at nearly $9 billion at list prices.

India’s aviation regulator DGCA had on August 26 lifted the ban on Boeing 737 Max planes’ commercial flight operations after almost two-and-half years.

All 737 Max planes were grounded in India by the Directorate General of Civil Aviation (DGCA) on March 13, 2019, three days after the crash of an Ethiopian Airlines 737 Max plane near Addis Ababa, which had left 157 people, including four Indians, dead.

European aircraft manufacturer Airbus dominates the Indian aviation market currently. As on October 15, there were 666 aircraft registered in India, 65 per cent of which were of Airbus, 21 per cent were of Boeing and the remaining were of other companies.

Currently, in India, only SpiceJet airline has 737 Max aircraft in its fleet. Akasa Air will be the second airline in India to operate this narrow-body aircraft.

India’s largest carrier IndiGo, which handles more than 50 per cent of domestic passenger traffic, operates Airbus’s narrow body aircraft only.

India’s growing economy and expanding middle class will fuel strong demand for commercial flights, driving the need for more than 2,200 new airplanes in South Asia valued at nearly $320 billion over the next 20 years, according to Boeing’s 2021 Commercial Market Outlook forecast.

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