Emirates, Alliance to close $1.5 billion deal by late March

08 March 2002

The US' Engine Alliance is expected to finalise by the end of March the estimated $1,500 million deal to supply engines for the Airbus A380 aircraft ordered by Dubai-based Emirates. On 28 February, Engine Alliance, a US joint venture between GE Aircraft Engines and Pratt & Whitney, signed a memorandum of understanding with Emirates to supply 98 GP7200 turbofans, including 10 spares (MEED 1:3:02).

Engine Alliance is planning to start detailed engineering designs for the engines by the end of 2002 and will run the first full test in the second quarter of 2004. The first A380 is scheduled for delivery in September 2005. The last super-jumbo will be delivered in 2011.

There will be two options to finance the estimated $1,500 million deal. Engine Alliance has offered a back-stop financing of up to 20 per cent of the total cost of the aircraft. The second option is for the US joint venture to provide an asset value guarantee. Emirates will be able to choose either of these options or a combination of both.

The GP7200 engines will be used to power the 22 A380 aircraft for which Emirates placed a firm order in November with Europe's Airbus Industrie. Estimated to be worth $7,000 million, the order was for 20 A380 passenger aircraft, with an option for 10 more, and two A380-800F (freighter) aircraft (MEED 16:11:01, Cover Story).

Alliance beat off competition from the UK's Rolls Royce for the order, which is the first engine contract let in the Middle East for the A380 (MEED 23:11:01).

The award of the A380 order has shifted the focus among engine manufacturers to Emirates' next major order, involving supply of engines for the Boeing 777-200 and 777-300 aircraft that Emirates plans to acquire. In early January, Engine Alliance and Rolls Royce submitted initial offers for the contract, in response to a request for proposals (RPF) issued by Emirates. Estimated to be worth $1,000 million, the contract will involve the supply, installation and maintenance of 60 engines, including 10 spares.

In November, Emirates signed a letter of intent with The Boeing Company of the US for 25 777-200 and 777-300 aircraft. The deal was valued at $6,600 million, with deliveries due to take place between 2004 and 2010.

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