(Bloomberg) — Thai Airways International Pcl has dropped Rolls-Royce Holdings Plc as its sole supplier of next-generation widebody engines, rejecting the UK company’s tougher stance on pricing.
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Bangkok-based Thai Airways on Wednesday said it was ordering 45 Boeing Co. aircraft, with an unspecified number of options available, powered by turbines from General Electric Co. Thai Airways’ existing Airbus SE A350 planes and Boeing 787 jets use Rolls-Royce engines.
Read More: Thai Airways Slams Rolls-Royce for Tougher Stance on Pricing
Rolls-Royce was publicly rebuked by Thailand’s flag carrier in November when Thai Airways Chief Executive Officer Chai Eamsiri threatened to take his business elsewhere after Rolls balked at price concession the airline sought. Rolls has also attracted heat from Emirates over the durability of its Trent XWB-97 engines on A350-1000s.
The British enginemaker has been on a quest to boost profitability under CEO Tufan Erginbilgic, renegotiating existing contracts and taking a tougher line with customers on new deals. The approach has ruffled some feathers but the Thai order marks one of the first times Rolls has publicly lost out on a deal as a result.
Erginbilgic said in a Bloomberg interview in December that he was conscious of the risk inherent in taking a tougher stance with customers, but added he’s aware of not pushing it too far, saying he’s seeking “sustainable relationships.”
A Rolls-Royce spokeswoman said that the company is making improvements to the durability of the Trent 1000 engine and plans further enhancements to increase so-called time on wing, or the time in between maintenance cycles. She added that Thai Airways is “a valued customer.”
Boeing and GE Aerospace didn’t respond to requests for comment.
Boeing Boost
Thai Airways’ order meanwhile gives Boeing a much needed boost as it grapples with intense scrutiny over its manufacturing controls following an accident on an Alaska Airlines flight earlier this year. While Thai Airways didn’t specify the aircraft type, Boeing received an undisclosed order in December for 45 787-9 Dreamliners.
The transaction also adds to a growing orderbook for Boeing, which earlier this year locked in a deal for 150 Max jets from India’s Akasa Air. Airbus SE, meanwhile, has picked up 20 A350-1000s from Delta Air Lines Inc. and another 11 A350-900s from Ethiopian Airlines.
Read More: Boeing Nears Thai Air Order as Engine Standoff Sinks Airbus
Thai Airways, emerging from a major restructuring, said the new aircraft will be added to its fleet between 2027 and 2033. The purchase won’t affect ongoing repayment plans under its debt rehabilitation process, according to Wednesday’s statement.
While the order marks a win for Boeing, the US planemaker is still mired in the fallout from the Alaska Airlines incident in January when a jet suffered a mid-air panel blow out. That resulted in the temporary grounding of more than 170 Max 9 jets and has heaped scrutiny on its — and its subcontractors’ — manufacturing practices and quality control. Boeing, under the close supervision of US aviation regulators, said this month that it plans to build its 737 Max aircraft at a slower pace during the first half.
Thai Air said it would unveil more details of the order and engine selection at next week’s Singapore air show. A recovery in tourism has bolstered the carrier’s business, with the company reporting a fourth-straight quarterly profit in November. It plans to exit its rehabilitation plan this year.
Thai Airways says it has 64 aircraft, mostly widebodies, in its fleet. While the carrier is rebuilding, that’s down from around 103 back in 2019 before Covid.
–With assistance from Charlotte Ryan.
(Adds Rolls-Royce statement in sixth paragraph.)
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