Xiamen Airlines, GE Fire Up Engine Ties

Xiamen Airlines Co. Ltd. and GE have signed an agreement that could tighten their relationship in aircraft engines, including potential for a more exclusive sales arrangement and establishment of a spare engine facility.

Xiamen Airlines operates a fleet of 148 Boeing aircraft, the vast majority powered by engines made by General Electric Co. and its CFM joint venture, according to the carrier’s website, citing data from early 2017.

Under the newly signed memorandum of understanding (MOU), Xiamen Airlines could “become a 100% GE/CFM engine-powered aircraft operator after the retirement of its existing 757 aircraft fleet,” the pair said in a statement announcing their new agreement. They added Xiamen Airlines will also continue to view GE/CFM as its preferred vendor of engine products and services.

Xiamen Airlines also said it was considering an order to buy five new engines from CFM, with the option to buy seven more spares. “Though the MOU is not a final agreement, we are inching one step closer to choosing GE/CFM as our only engine provider,” a Xiamen Airlines spokesman told Caixin.

Signing of the agreement comes weeks after Xiamen Airlines signed a similar MOU with Safran Aircraft Engines, the French co-owner of CFM, during French President Emmanuel Macron’s state visit to China in January. That agreement saw Xiamen Airlines sign a major order to buy engines worth about $2 billion from CFM.

The latest MOU will also see GE help Xiamen Airlines in fleet management and other digital related services. The pair will also assess the feasibility of setting up a spare engine and material management center in a free trade zone in Xiamen Airlines’ home province of Fujian.

Contact reporter Mo Yelin (yelinmo@caixin.com)