Air France-KLM and Rolls-Royce have not yet reached agreement on the terms and conditions under which the Franco-Dutch group’s MRO arm will be allowed to perform maintenance on the Trent XWB engines.

Discussions started several years ago and it appeared that the companies found common ground at the Paris Air Show in June, with Air France-KLM finalizing its order for 25 Airbus A350-900s and signing a Memorandum of Understanding (MOU) with Rolls-Royce for the aircraft’s sole powerplant, the Trent XWB. Air France-KLM placed the A350 order in September 2011, but refused to firm it because of the discord with Rolls-Royce. The MOU included a section on the maintenance by Air France Industries KLM Engineering & Maintenance (AFI KLM E&M) of the Trent XWB engines.

“Our strategy is straightforward: we want to be on the market for the maintenance of all new products and engines – this includes Rolls-Royce engines,” AFI president Anne Brachet reiterates. She confirms the deal is not done.

AFI KLM E&M is continuing its targeted development strategy and ensuing investments in spite of the deepening restructuring efforts of its parent company Air France KLM Group, Brachet tells Aviation Week on the sidelines of MRO Europe in London.

Recent and ongoing investments include a new Engine Test Cell for use with GE90-94/115, CFM56-5C, and GP7200 powerplants in 2012, the launch of component support services for the Boeing 787, and a new A380 maintenance hangar at Paris-Charles de Gaulle Airport (CDG) became operational this summer. A new €40 million facility at CDG for composite fan thrust reversal maintenance is scheduled to be operational mid 2015. AFI KLM E&M is also constructing a new, fully-owned component workshop in Shanghai.

AFI KLM E&M, however, also has to participate in the group’s restructuring and is taking new steps to reduce costs. Efforts to create further synergies between AFI and KLM E&M are increased and both companies are progressively more behaving as “one” due to the new governance and organization of the group since July.

“As part of Transform 2015 [Air France-KLM’s restructuring program] we have been asked to push third-party revenue and increase partnerships,” says Brachet. There will be a stronger focus on high-value support services, but “we are very careful to keep the engineering knowledge on airframe support. As a European MRO provider it is difficult to compete on the man hour-cost. But the situation could be different in a couple of years; we see labor costs increasing in Asia. We have to take this into account.”