Exclusive-Airbus Seeks Pratt & Whitney Damages Over Engine Delays, Sources Say

Airbus Seeks Damages from Pratt & Whitney Over Engine Delivery Delays

Escalating Dispute and Industry Impact

By Tim Hepher

PARIS, March 19 (Reuters) - Airbus is ramping up pressure on U.S. engine maker Pratt & Whitney by pursuing potential damages in an escalating dispute over late engine shipments as it struggles to lift aircraft production, two people familiar with the matter said.

The move follows a months-long dispute between the world's largest jetmaker and the RTX subsidiary over who gets priority access to scarce engine supplies: aircraft assembly lines or airlines already facing lengthy queues for repairs.

Pratt & Whitney's Geared Turbofan engines power at least 40% of the best-selling Airbus model, the A320neo family, and compete for airline contracts with CFM International's LEAP engine.

Hundreds of the narrowbody jets have been grounded due in part to long waiting times for engine inspections and repairs following a manufacturing problem at Pratt & Whitney, putting pressure on supplies of engines for airplane production.

The clash highlights a broader tug of war over scarce supplies of engines and parts since the pandemic.

Airbus Output and Legal Actions

Airbus Shaved Output Targets

Airbus has accused the RTX unit of backtracking on the number of engines allocated to its jet factories, citing the shortfall for a recent decision to cut output targets. Pratt has said it is working closely with Airbus while seeking the right balance for airlines struggling to keep existing jets flying.

Airbus CEO Guillaume Faury set the clock ticking on possible legal action last month, saying the planemaker was ready to enforce contractual rights.

Now, the dispute has triggered a claim that could, if successful, lead to unspecified damages, the sources said, asking not to be named due to the sensitivity of the discussions.

The forum for the dispute could not immediately be identified, but most cross-border commercial claims in aerospace are handled behind closed doors in arbitration proceedings.

An Airbus spokesperson said the company had nothing to add to Faury's remarks, given at a results presentation last month.

A spokesperson for RTX had no immediate comment.

Industry Relationships and Supply Chain Challenges

Juggling Between Planemakers and Airlines

The dispute goes to the heart of a fraying three-way relationship between planemakers, engine suppliers and airlines over how engines and parts are allocated.

Since the pandemic disrupted supply chains, engine makers have to balance deliveries of new aircraft against airlines' demands for repairs to keep their fleets flying.

Allegations and Industry Reactions

Airbus alleges that Pratt & Whitney over-promised on engine shipments while diverting engines to repair shops, where engine makers make most of their income.

That risks placing the planemaker at odds with some of its own airline customers after Lufthansa's CEO defended Pratt, saying carriers should have priority.

RTX CEO Chris Calio told analysts in January that Pratt & Whitney had to strike the right balance, adding that overall deliveries jumped 50% last year.

Tensions between planemakers and engine suppliers are not new, with supply constraints and higher parts prices rippling across the industry.

Comparisons to Past Disputes

But the dispute with Pratt & Whitney is shaping up to be among the biggest tests of industry cohesion since Airbus clashed in court with Qatar Airways over A350 jets in 2022.

It comes as Airbus and Boeing examine engine options for the next generation of jets, though in practice most disputes get resolved in a shorter time frame than development decisions, which shape partnerships over decades.

Still, major disputes remain rare in an industry dominated by two planemakers and a handful of large engine suppliers.

Airbus, meanwhile, is under pressure on its own production network, having cut delivery goals late last year due to supply issues with fuselage panels from a Spanish company.

(Reporting by Tim Hepher; Editing by Joe Brock and Bernadette Baum)