Lufthansa says A320neo engine improving but not there yet

FRANKFURT (Reuters) - Lufthansa (LHAG.DE) said issues with a new Pratt & Whitney engine powering its Airbus A320neo plane are not fully fixed and as a result it was not ready to put more of the revamped Airbus jets into commercial service.

"The engine issues are slowly improving, we're not there yet, that's why we have not agreed to take the second aircraft into the fleet," Lufthansa Chief Executive Officer Carsten Spohr said after the German carrier reported annual results on Thursday.

Plane manufacturer Airbus (AIR.PA) missed an end-2015 target for the first delivery of the new version of its best-selling plane after it was found the Geared Turbofan engines made by Pratt, a unit of United Technologies Corp (UTX.N), needed longer than usual to start under some circumstances.

Lufthansa, which stepped in as the first operator when Qatar Airways refused to take the plane, took delivery of its first A320neo in January.

Pratt said the Geared Turbofan was operating with 99 percent dispatch reliability at Lufthansa as of Thursday, echoing remarks it made last week.

It is installing a hardware fix on current-production engines due for delivery in June, and will retrofit engines made earlier. Pratt said that by later this year, the hardware fix will improve engine start times so they are close to what airlines are used to with other engines.

Software issues, where the engine sends erroneous messages to the cockpit, are about 50 percent resolved, Spohr said.

Pratt said the so-called nuisance messages generated by the engine control system had been reduced by more than 80 percent as of Thursday, due to software changes by Airbus and Pratt.

"Pratt will implement another software fix next month that will reduce nuisance messages further," the company said.

For now, Lufthansa is flying the new jet only within Germany, where it has a large base of engineers, Spohr said.

"We could fly to other places but we would need more engineers in those locations," Spohr said.

He said the German carrier was receiving compensation from Airbus until it could make full use of the A320neo. He noted the jet was showing a 20 percent reduction in costs compared with the earlier model. Pratt declined to comment on whether it would have to pay compensation.

Indian budget carrier IndiGo took delivery of a Pratt-equipped A320neo last week.

Lufthansa is due to take delivery of 52 new planes this year, including five A320neo jets.

(Reporting by Victoria Bryan in Frankfurt and Alwyn Scott in New York; Editing by David Clarke and Chris Reese)