Tensions ease over Pratt engine supplies to Airbus: sources

PARIS (Reuters) - Airbus AIR.PA is more confident in the ability of Pratt & Whitney UTX.N to speed up delayed engine shipments, two people familiar with the matter said on Monday, in a sign that supply-chain gridlock affecting European aircraft deliveries may soon reach its peak.

FILE PHOTO: The logo of Airbus Group is seen on the company's headquarters building in Toulouse, Southwestern France, April 18, 2017. REUTERS/Regis Duvignau/File Photo

Airbus Chief Executive Tom Enders said in July that Pratt & Whitney’s performance was “unsatisfactory” but a person familiar with the situation said on Monday the company had seen evidence the engine maker was overcoming its technical difficulties.

“The level of confidence is improving,” a person close to Airbus said.

Airbus declined comment ahead of Oct. 31 earnings.

Its shares closed up 0.8 percent.

Pratt & Whitney declined comment.

Pratt & Whitney’s Geared Turbofan engine is one of two types of powerplant offered on the A320neo and its fuel-saving performance is tied to the sale of more than 5,000 Airbus jets.

A trio of technical problems has left over two dozen semi-completed jetliners parked without engines in Toulouse, driving Airbus profits down sharply at mid-year.

Pratt & Whitney has fixed two of the problems - concerning fan blades and an oil seal - and may report progress on a third one related to the combustion chamber on Tuesday when its parent reports quarterly earnings, industry sources said.

Airbus planemaking chief Fabrice Bregier said last week he expected engines with redesigned parts and a full service life to be delivered from end-year. He said Airbus’s 2017 target of 200 A320neo deliveries was reachable but tough.

Any breakthrough would not come in time to help Airbus’s third-quarter earnings, however.

Total Airbus deliveries fell 1.7 percent in the first nine months but those of single-aisle aircraft like the A320neo, which generate most Airbus profit and cash, fell 7.9 percent.

“We expect a weak third-quarter update with slow progress on the A320neo the key driver,” Berenberg analysts said. Pratt & Whitney has repeatedly reaffirmed its target to build 350-400 engines this year.

But within that total, more engines than expected have been diverted from airplane production to a pool of spares for airlines needing to swap engines for premature checks. The problem has been especially severe in India.

Airlines can also choose engines from CFM International, co-owned by General Electric GE.N and France's Safran SAF.PA.

Airbus can alter the mix of aircraft powered by each type of engine on its production line, but needs four months’ notice to decide which engines go on which airframe, meaning it has been left with aircraft for Pratt & Whitney customers but no engines.

Reporting by Tim Hepher, editing by David Evans