September 18, 2012 / 5:33 PM / 6 years ago

Air France spat with Rolls-Royce seen dragging on

PARIS (Reuters) - A dispute over engine maintenance between Air France-KLM (AIRF.PA) and Rolls-Royce (RR.L) that has delayed a $7 billion Airbus EAD.PA plane order for a year already could take several months more to resolve, a senior airline executive said.

Britain's Prime Minister David Cameron (2nd L) and Deputy Prime Minister Nick Clegg (R) are shown the around the new visitor centre at the Rolls Royce engine production facility, by Chief Executive John Rose (2nd R), in Derby, central England March 7, 2011. REUTERS/Christopher Furlong/Pool

Air France-KLM placed the provisional order for 25 wide-bodied A350-900 passenger jets on Sept 16, 2011, at the same time as ordering 25 Boeing (BA.N) 787 Dreamliners.

Although the Boeing order has since been confirmed, the Airbus part of the deal remains incomplete because Air France-KLM and engine maker Rolls-Royce cannot agree over who should maintain the engines on the Airbus aircraft.

“The issue is service and maintenance. We have a solid engine maintenance operation and Rolls has a policy of doing the maintenance itself,” Alexandre de Juniac, chief executive of the Franco-Dutch group’s French network Air France, told reporters on Tuesday.

Asked how long it would take to resolve the dispute, he said, “In the next few months. We are not in a hurry.”

Air France, traditionally a customer of General Electric (GE.N) engines, wants to expand its involvement in servicing engines, not only for its own fleet but also for other airlines to try to boost profits.

Like most engine makers, Rolls-Royce makes much of its civil engine profit margin in after-sales service and maintenance.

The UK company declined to comment on the Air France talks.

“We don’t comment on commercial discussions,” spokesman Richard Hedges said.

Air France said in late August it was studying opening a maintenance plant in China. As traffic rises, pushing up the volume of regular maintenance visits, Air France is banking on maintenance growth to boost the airline’s restructuring plans.

Reporting by Cyril Altmeyer, Tim Hepher; Editing by Hans-Juergen Peters

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