Non-European Engine May Power A400M


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April 21, 2003

Non-European Engine May Power A400M


Airbus Military Co. will likely select Pratt & Whitney Canada Co. to supply turboprop engines for its A400M airlifter — barring pressure from the seven European partner nations that plan to buy the transport aircraft, European government and industry sources say.
The Longueuil, Quebec, firm and its PW180 engine are competing against the TP400-D6 offered by Paris-based consortium European Propulsion International (EPI). Both engines are under development.

The engine decision in the 180-aircraft, 18.2-billion-euro ($19.9 billion) program will apparently turn on price, which the sources say favors Pratt & Whitney.

But EPI executives said European government officials should step in and pay the difference, if necessary, to ensure that the European aircraft uses a European engine.

“We would be, in my view, undermining the European cause of this aircraft were we to choose a Canadian bidder for the engine,” a German Ministry of Defense official said April 15. “The engine, too, has to come from a European consortium.”

EPI is a joint venture of Rolls-Royce plc, London, which has a 28 percent share in the consortium; Snecma, Paris, with 28 percent; MTU Aero Engines, Munich, with 28 percent; and Industria de Turbo Propulsores S.A. (ITP), Bilbao, Spain, with 16 percent. Pratt & Whitney Canada is a subsidiary of United Technologies Corp., Hartford, Conn.

Engine Choice Vital

Airbus Military, Toulouse, France, must present a complete, economical aircraft concept — including engine choice — before a contract can be signed with Organisation Conjointe de Cooperation en Matière d’Armement, the Bonn-based organization that is managing A400M negotiations for the seven partners: Belgium, Britain, France, Germany, Luxembourg, Spain and Turkey.

“Airbus is close to telling the countries that they are choosing Pratt & Whitney,” a Rolls-Royce executive said April 16. “Their offer is — as we are told — more than 400 million euros [$436.7 million] cheaper than that of EPI. We cannot confirm this, though, at this point.”

The Rolls-Royce executive said Airbus had promised it would give EPI more detailed information so the latter could respond to the existing price difference. He declined to discuss further details of the two bids.

“Yes, this is also what we hear at the moment and we are very concerned about this,” said a senior EPI official in Paris. Now, she said, would be the time for European politics to come into play.

Nancy German, Pratt & Whitney's vice president of communications, said April 17 that the company would not comment on reports that the firm's engines are being favored for the A400M. She also declined in an interview to discuss details of Pratt & Whitney's bid for the A400M program.

An Airbus Military official emphasized the company’s right to choose freely.

“Airbus Military is taking a commercial approach,” the official said April 16. “It is up to industry to make these kinds of decisions.”

Any attempt to get some government financing for the engine would require all the partner nations to agree, and that would require lengthy talks.

“The only effect would be to push the contract back in time,” the Airbus official said.

The official declined to say how much the engine contract might be worth to its manufacturer.

A senior BAE SYSTEMS executive in London said political support for EPI is eroding in Britain and Germany because the Pratt & Whitney offer is significantly cheaper.

“This price difference is existential, and the officials have come to terms that they do not want to interfere in the commercial approach here,” the BAE official said April 17.

But a senior Spanish government official said his country would not sign the A400M contract unless the EPI engine were chosen — the only option that would provide work for the Spanish firm ITP.

EPI member MTU Aero Engines is a partner in Pratt & Whitney’s civilian PW800 engine, which is the civil prototype for the military PW180 being offered for the A400M.

MTU spokesman Odilo Mühling in an April 17 interview said that his company is “absolutely committed to the EPI offer. MTU does not know what the Pratt & Whitney offer to Airbus entails.” Should Pratt & Whitney win, cooperating on the military engine program would be negotiated, he said.

Haggling Over Price

A prevailing problem in the debate has been that industry and the A400M countries have not come to terms with the much higher cost of picking the European engine.

The Rolls-Royce official said European industry cannot go lower.

“We have to remember that there a number of issues unsolved here in the engine debate, and it is a project that has never been tested before,” the official said. “Pratt & Whitney received subsidies from the Canadian government of some $150 million for engine programs, which, of course, enabled them to lower the price of the offer. Our consortium did not have that and, generally, a consortium consisting of four nations produces a lot more additional costs.”

The official said that Pratt & Whitney is financially more stable than EPI, and can take on more risk than its European counterparts.

Highly technical risks include the aerodynamic integration of the engine into the aircraft, selecting a producer to build a propeller with a span of more than 5 meters, and integrating it with the engine.

“There is only that much risk we can accept. Rolls-Royce would be done if, in a worst-case scenario, those risks come true. In front of our shareholders, we have to seek to minimize the risks,” he said.

On the reported offer that Pratt & Whitney would ensure that 75 percent of the work would be done in Europe, a Snecma executive said, “Snecma will definitely not work with them.”

The Snecma executive voiced widespread fears that if it won, the North American engine would actually be more expensive due to the sale of spare parts and maintenance over the life of the program. The governments should watch not only the initial acquisition, but the total costs.

Prior to a contract signature, however, Germany’s parliament must approve the A400M program and its costs.

Before the contract with its six partners can be signed, parliamentarians in Berlin warned, the engine decision must be clear. An approval on A400M is slated for May 7, after which the final touches can be put on the airlifter contract so that a signing ceremony could take place during the Paris Air Show June 16-18.

Pierre Tran in Paris and David Pugliese in Victoria, British Columbia, contributed to this report.