INTERNATIONAL AERO ENGINES celebrated its 25th anniversary this year. Plenty has happened since the consortium formed in 1983 to produce the V2500 and its shareholders divided design and production responsibilities, leaving Pratt & Whitney (32.5%) to take on the combustor and high-pressure turbine, Rolls-Royce (32.5%) to engineer the high-pressure compressor, Japanese Aero Engines (23%) to build the fan and low-pressure compressor and MTU Aero Engines (12%) to forge the low-pressure turbine.

IAE went on to partner with Airbus and McDonnell Douglas, offering the engine for the A320 and MD-90. In 1989, the V2500-powered A320 entered revenue service with Adria Airways, Cyprus Airways and Indian Airlines, and five years later the V2500 powered the first production MD-90 on its inaugural flight. Thus far, more than 2.1 billion passengers have flown on V2500-powered aircraft.

"During the past 25 years, IAE has grown to become one of the largest civil engine programs of all time, with more then 5,500 V2500 engines either delivered or on firm order to more than 155 customers around the world," IAE President and CEO John Beatty said of the milestone.

In 2005, IAE launched its V2500 SelectOne build standard, an upgrade program for its standard V2500-A5, and its V2500Select aftermarket support product. The new standard is designed to decrease fuel burn by an additional 1%, improve time-on-wing by 20% and reduce shop visits by as much as 40%. The aftermarket product, V2500Select, overhauls engines to the latest OEM standards and is expected to increase asset value through technology upgrades and efficiency targets including time-on-wing and fuel burn improvements.

TRIED AND TRUE

Chinese investment has been particularly strong. In November, IAE won a $700 million deal from Sichuan Airlines for V2500 Select One engines to power 18 A320s slated for delivery from 2009 through 20012. "Part of this deal includes retrofitting the SelectOne into existing engines that were delivered prior to the new build standard," IAE China Regional VP Craig Welsh explains. "We're delivering a lot of value to Sichuan, which is one of the reasons why we've been so successful in keeping them as a major customer, and I also think it's a good example of why we've been very successful in China."

Sichuan Airlines launched the V2500 in China in 1995 and the engine has been selected for more than 180 additional A320s placed on firm order in East Asia, representing more than half the market share in China. The contract also designates IAE as Sichuan's preferred engine supplier for future A320 family acquisitions.

"Over the past two years we've had orders for our new build standard from basically every major airline in China that flies the A320," adds Welsh. "We think a lot of this can be attributed to the new build standard we have, as well as the benefits of our aftermarket program."

First delivery of the SelectOne build standard took place in September and it entered service with Indian LCC IndiGo in October. In 2007, V2500-powered aircraft operated by carriers based in Greater China (Macau, Hong Kong, Taiwan and mainland China) flew 274,089 flights.

"It's easy to take a very bullish view on China for the long term," says Welsh. "If you look at the Boeing and Airbus forecast for aircraft, every year they revise it upwards. About five years ago, I think they were predicting another 2,000 aircraft in China over the next 20 years, half of which would be in the narrowbody range. But if you read their forecast today, I think it's probably closer to 3,000 aircraft. They are growing rapidly, air traffic is rising at double-digit rates, and as they continue to develop I think the need for air travel and aviation-related products is going to go through the roof."

Capable of 22,000-33,000 lb. of thrust, IAE's two-shaft high-bypass turbofan is available in seven different settings for the A319, A320 and A321 as well as the Airbus Corporate Jetliner. In 2005, IndiGo purchased V2500 SelectOne engines for 100 A320s and V2500Select aftermarket support in a deal valued at $1.7 billion.

"So far it's been a successful program," Welsh recognizes. "The engine has performed exactly as predicted. All of the major milestones were met along the way and we delivered on time." The flying testbed flight plan was completed with seven flights and approximately 45 flight hr. One engine, installed on a 747, finished ground tests of 175 hr. and 250 cycles. Another engine underwent telemetry tests to verify the reduction of stresses in the HPC rotor blades and check temperatures and pressures in the HPT. And a third engine withstood US FAA endurance testing at a Florida test facility.

RISK TRANSFER

Shortly before the Paris Air Show in 2007, IAE announced more than $3 billion worth of SelectOne orders. Nearly 80% of the engine orders it won last year are backed by aftermarket agreements. "One of design objectives is to have longer time-on-wing, so we don't expect to see it in the shop as often as the prior-standard engine," Welsh points out.

"There's a lot of proactive engine health monitoring and maintenance planning up front and then we take care of the engines when they come off-wing for engine maintenance. So it's a comprehensive program, and I think one of the things that's been attractive worldwide, and particularly in China, is the risk transfer of product performance. Risk transfers from the airline to IAE because we have a fixed price for our services. So if the engine doesn't perform to standards, it's basically on IAE's dime."

Based on historical fleet and firm backlog, IAE projects V2500-powered aircraft in China to grow at 13% per year between 2000 and 2010. Welsh estimates that about 95% of V2500 Select One orders from China will include aftermarket support agreements.

"Over the last three years, the Chinese government has ordered over 400 A320 family aircraft directly from Airbus," he says. "After they place the order, they allocate those aircraft to the various airlines in China, and then those airlines basically compete for the buyer furnished equipment. Of course, engines are probably the biggest ticket on the BFE list, so there's been a lot of opportunities for the V2500 over the last few years. Fortunately for us, it happened during the SelectOne new build standard launch. I think that helped us secure a significant portion of those orders."

Looking ahead, IAE anticipates growth in other regions as well. In October, Latin American carrier Grupo TACA (profiled in the last issue of this magazine) picked the V2500 SelectOne to power 15 A320-family aircraft under a deal valued at $400 million. TACA, which currently operates 37 V2500-powered A320s, is awaiting delivery of a further four from a previous order, creating a total backlog of 19 aircraft with IAE engines.

"We've got a backlog of around 2,000 engines," adds Welsh. "Most of these are our SelectOne. So I think going forward we're expecting that pretty much any engine deal will be for the new build standard."