GE Seeks To Sell Engines To Airbus As Boeing Scales Back Production

General Electric Co. (GE) has entered into talks with European aircraft manufacturer Airbus to design and sell an engine variant for Airbus’ widebody A330neo plane, reported the Wall Street Journal.

Airbus executives are reportedly enthusiastic about GE’s offer. Rolls-Royce Holdings of London is currently the only engine supplier to Airbus jets.

The development arose as GE’s other big customer, Boeing (BA) scales back production of its 787 Dreamliner aircraft due to weakening demand.

"We continuously work to identify opportunities to add value for our customers and to assess introduction of new technologies into our existing engines," GE said.

An Airbus spokesman said the plane manufacturer is "always in talks with our engine makers about new technologies."

Moreover, the prolonged grounding of Boeing's 737 MAX – following two deadly crashes last year – has revised the aviation industry's global supply relationships. As Boeing awaits approval from the Federal Aviation Administration to fly 737 MAX again, suppliers, including GE, have been hit hard.

At present, GE's GEnx engine competes with the Trent 1000 engine of Rolls-Royce Holdings for the 787 Dreamliner.

The GEnx engine can reportedly provide airline customers fuel savings and lower costs.

Bloomberg reported that the development of engine platforms can entail billions of dollars in expenditures. As such, engine manufacturers try to expand their turbines’ use across various different models.

Meanwhile, as Boeing continues to struggle, Airbus has its troubles as well.

Airbus recently recorded an annual net loss of 1.4 billion euros ($1.5 billion), which included a charge of 3.6 billion euros ($3.9 billion) to cover settlements with authorities in the U.S., France and Britain over huge bribes it paid to secure deals in China, Taiwan, and Malaysia, among other countries.

Chris Bryan, Bloomberg opinion columnist, wrote: “In theory, building commercial jets is a fantastic business. There aren’t many competitors -- Airbus and Boeing Co essentially have a duopoly in large aircraft… The trouble is that designing and launching a new commercial airliner consumes massive amounts of capital; and that’s if all goes to plan. Typically it doesn’t.”

Bryant noted that Airbus’ 2020 production and profit guidance came in weaker than expected. The company should generate 4 billion euros ($4.3 billion) of free cash flow this year, he wrote, “but once the corruption [bribery] fines and several hundred million euros of tax and legal costs are paid, there will be precious little left.”

Airbus also in ensnared in production woes – despite a huge backlog order for more than 6,000 A320neo jets, the company is only manufacturing about 700 per year.

As such, airlines ordering this craft must wait about nine years for delivery.

Boeing’s woes continue to multiply.

The 737 MAX now faces yet another safety concern – foreign debris was found in the fuel tanks of several new planes which were being held in storage.

“While conducting maintenance we discovered foreign object debris in undelivered 737 Max airplanes currently in storage,” said a Boeing spokesman. “That finding led to a robust internal investigation and immediate corrective actions in our production system."

Mark Jenks, the general manager of the 737 program, said in a memo to employees that the debris was “absolutely unacceptable.”

The Federal Aviation Administration told the BBC that it was aware of the debris issue.

"The agency increased its surveillance based on initial inspection reports and will take further action based on the findings," FAA added.

But Boeing insisted it didn't expect the debris discovery to cause any new delays to the 737 MAX's return to service by the middle of this year.