Blow to Rolls-Royce as easyJet picks CFM to power new Airbus fleet

The discount airline easyJet yesterday chose CFM International as the supplier of engines for its new Airbus fleet of aircraft, snubbing a rival consortium that included Rolls-Royce.

The deal, thought to be worth more than $1bn (£627m), will see CFM supply easyJet with some 480 of its CFM56-5 engines for the 120 new Airbus A319 aircraft it recently ordered.

But analysts estimated the deal could be worth around another $600m to CFM if easyJet exercised its option over a further 120 of the Airbus aircraft.

CFM International is a 50:50 joint venture between Snecma Moteurs of France and the General Electric Company, while the losing bidder IAE, or International Aero Engines, includes Rolls-Royce and Pratt & Whitney of the US.

Ray Webster, easyJet's chief executive, said there had been "very close competition" between CFM International and IAE "both of whom were focused intently on trying to secure the deal".

"Both companies tabled very attractive offers and after an intensive review of all aspects of the proposal we were able to reach a clear decision," Mr Webster said.

The deal with CFM comes hot on the heels of a similar tussle between the US giant Boeing and Europe's Airbus for easyJet's aircraft order. The order, which followed 10 months of wrangling, saw the company spurn Boeing in favour of Airbus, which is supplying it with 120 A319 planes to 2007. EasyJet, which recently bought its rival Go, has options with price protection on another 120 A319s until 2012. The first plane is expected to be delivered in the second half of next year.

The deal, estimated to be worth some £4bn at list prices, was groundbreaking since it marked a departure from the classic no-frills airline model of sticking with one aircraft type to keep training and maintenance costs down. EasyJet is thought to have secured a discount of up to 60 per cent on that order, however, knocking the price of each aircraft down to around $20m.