IndiGo signs major jet engine and repair-shop deal with CFM

By Tim Hepher and Shivansh Tiwary

FARNBOROUGH, UK, July 20 (Reuters) - IndiGo, India's largest airline, signed a preliminary agreement with CFM International on Monday to buy over 1,000 LEAP-1A engines, marking a record order for the French-U.S. engine maker that is emerging from industry-wide congestion over repairs.

The memorandum of understanding at the Farnborough Airshow provides engines to go with the same airline's blockbuster order for 500 Airbus A320neo-family aircraft in 2023 at the Paris Airshow, which alternates with Farnborough as the industry's annual showcase.

The deal also includes plans for the airline to open its own maintenance, repair and overhaul centre as well as a parts supply deal, echoing a similar move by Ireland's Ryanair.

CFM, which makes engines for the Boeing 737 MAX and competes with Pratt & Whitney on the Airbus A320neo, is the world's largest engine maker by number of units sold. It is co-owned by GE Aerospace and France's Safran.

The engine industry has faced disruption for years over long maintenance waiting times and shortages of spare parts, which have forced many airlines to keep planes temporarily idle.

CFM said at the weekend it had reduced the number of planes grounded for reasons related to its LEAP engines to "near zero".

Rival Pratt & Whitney, which has borne the brunt of the groundings due to shortages of maintenance capacity and metal contamination issues, has also reported improvements.

The decision by two of the world's largest budget carriers to build repair shops is seen partly as a defensive move to ensure access to scarce repair capacity, industry sources said.

Both airlines will handle only their own engines rather than farming out their in-house resources to other carriers.

Even though engine makers are gradually easing delays, a sharp rise in the number of planes being built means access to repairs will be a strategic topic for airlines in the future.

Boeing warned last week that repair times, dwindling numbers of experienced technicians and supply chain issues would keep engine services "under strain throughout much of the decade."

The U.S. planemaker predicted an 88% increase in total annual MRO demand to $215 billion by 2045.

(Editing by Tomasz Janowski and Deepa Babington)