Etihad Airways has signed a deal which could be worth up to US$200 million with International Aero Engines (IAE) to provide a comprehensive engine overhaul and repair service for 14 Airbus aircraft in its narrow-body fleet.

The Aftermarket Services agreement covers the Abu Dhabi-based airline’s existing fleet of V2500-powered aircraft. The contract covers a total of 30 V2500 SelectOne engines (including two spares) that power 12 A320 and two A319 aircraft, all currently in service. All of these engines will be upgraded to the latest V2500 SelectOne build standard during their scheduled overhauls, according to a statement from Etihad.

“The decision to incorporate the V2500 SelectOneâ„¢ upgrade is a natural progression in our relationship with IAE,” said Etihad Airways’ chief executive, James Hogan. “Transferring engine maintenance responsibility to IAE allows us to focus upon our core strengths. The engine deal will deliver significant cost benefits for Etihad, especially in terms of lower fuel consumption, reliability and increased flying time between maintenance overhauls.”

The engine overhaul deal follows the announcement in June at the Paris Air Show that IAE would provide 44 V2500 engines to power Etihad’s 20 new narrow-body Airbus A320 aircraft, due for delivery between 2011 and 2015. The US$575 million deal also includes a long term after market services agreement. aA key selection criterion in choosing V2500 engines and after market deals has been environmental performance. The lower emissions of the V2500 engines will assist Etihad in achieving its environmental targets. The V2500 engines are also particularly suitable for Middle East operations and are able to perform consistently well in high temperatures.