Pratt & Whit­ney head says en­gine out­put eas­ing

The Pak Banker - - COMPANIES/BOSS -

Pratt & Whit­ney's new chief says the per­for­mance of sup­pli­ers is much bet­ter than year ago, eas­ing con­cerns over its abil­ity to ex­e­cute a $10 bil­lion gam­ble on a new en­gine as it seeks to re­claim a once revered sta­tus in the jet in­dus­try.

But the in­dus­try vet­eran said he knew how to find out whether the com­pany's makeor-break pro­duc­tion goals for the lat­est short-haul air­plane en­gine are un­der strain. "I will get ev­ery en­gine se­rial num­ber and will see the parts that are com­mit­ted and if it sup­ports the en­gine ship­ment date," Robert Leduc told Reuters at the Sin­ga­pore Air­show.

Speak­ing af­ter open­ing a high-tech fan-blade plant in Sin­ga­pore, Leduc also played down con­cerns over air­craft de­mand, say­ing the com­pany had seen no de­fer­rals or cancellations. Once dom­i­nant in com­mer­cial avi­a­tion, Pratt lost its way in the 1990s af­ter bet­ting on the wrong cat­e­gory of plane and leav­ing the door open to Gen­eral Elec­tric (GE.N) and its French part­ner Safran (SAF.PA), who now lead sales by vol­ume.

It is seek­ing to re­gain its po­si­tion with a fuel ef­fi­cient en­gine for jets in­clud­ing the Air­bus (AIR.PA) A320­neo as well as Canada's Bom­bardier (BBDb.TO) and the lat­est model of Em­braer.

De­vel­oped at a cost of $10 bil­lion, the Geared Tur­bo­fan en­gines claim to burn 15 per­cent less fuel and have al­ready in­flu­enced the way some fu­ture jet en­gines are de­signed.

Pratt has sold 7,000 of them and trig­gered other en­gine and plane de­vel­op­ments. But an­a­lysts warn the com­pany still has much to prove as it at­tempts to in­crease pro­duc­tion seven-fold in the next four years. When the pre­vi­ous pres­i­dent stepped down ear­lier than ex­pected last month af­ter steer­ing through de­vel­op­ment, the boss of par­ent United Tech­nolo­gies (UTX.N) named re­tired op­er­a­tions ex­pert Leduc to take on the cru­cial early pro­duc­tion phase.

It was the se­cond time the no-non­sense 59-year-old had been pulled out of re­tire­ment. Re­turn­ing to Pratt & Whit­ney's Con­necti­cut of­fices on Jan. 14, Leduc paid trib­ute to the ad­vanced de­sign, but told se­nior staff: "Now we've got to ex­e­cute and de­liver to our cus­tomers. Our rep­u­ta­tion de­pends on it," ac­cord­ing to a per­son present. It plans to make 200 Geared Tur­bo­fans this year, roughly dou­bling in 2017. That num­ber will grow close to 1,400 by 2020.

GE-Safran ven­ture CFM In­ter­na­tional also has ag­gres­sive out­put plans, but ben­e­fits from an ex­ist­ing sup­ply chain. Both en­gine mak­ers are at the fore­front of a record out­put drive that has trig­gered con­cerns over the abil­ity of weaker sup­pli­ers to keep up.

Any slip-ups could af­fect profit across the sec­tor and Pratt must ad­di­tion­ally demon­strate it can ex­e­cute on an all­new civil pro­ject for the first time in years. "I have spent an in­or­di­nate amount of time on this in the last four weeks; it was prob­a­bly my num­ber one pri­or­ity, dig­ging into the in­dus­trial sched­ule," Leduc said.

With $22 bil­lion of longterm sup­ply agree­ments, or 85 per­cent of its needs now in place, con­fi­dence in sup­pli­ers has risen in the past year, Leduc said. That al­lows Pratt to fo­cus most ef­fort on the en­gines where needed.

"We weren't man­ag­ing that way last year," Leduc said. "I think ev­ery en­gine was a fist fight; we didn't have the fi­delity around the (sup­plier) com­mit­ments. Now the de­sign is sta­ble; once (that hap­pens) you give your op­er­a­tions a fight­ing chance to de­liver." Even so, some glitches need to be re­solved. The Air­bus A320­neo missed an end2015 tar­get for first de­liv­ery af­ter it emerged the en­gines needed longer than usual to start prop­erly, adding pre­cious min­utes to turn­around times.

A part was re­designed and will be fol­lowed by a soft­ware fix in 3-4 weeks. But the prob­lem is an ex­am­ple of the slim mar­gin for er­ror in the cut-throat short-haul air­line mar­ket. Most mod­ern jet en­gines need 150180 sec­onds to start up. Pratt's new en­gines cur­rently need closer to 350 sec­onds. By June the goal is to get this to 200 sec­onds, and by end-year back to nor­mal, a per­son fa­mil­iar with the re­pair plan said.

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