Rockwell Collins bets big on smart jets
Rockwell Collins is making its biggest-ever acquisition in a bet that airplanes will get smarter, as everything from lie-flat seats to toilet valves send live data to inflight crews and maintenance workers.
The $6.4 billion purchase of B/E Aerospace eclipses the 83-year-old avionics maker’s takeover of Arinc in 2013. That deal, just 11 days after Kelly Ortberg was named chief executive officer, provided new ways to pipe data into planes. With Wellington, Fla.-based B/E Aerospace, Ortberg gains the largest equipment supplier for aircraft cabins — and the chance to provide reams of new information to airline operators.
“It sets us up for the future,” Ortberg said. “We’ve made major investments in next-generation airplanes. That trend is going to translate into the interiors of aircraft.”
The transaction vastly broadens a product portfolio that has been centered on aircraft communications and computing equipment since the Cedar Rapids, Iowa-based company was spun out of Rockwell International in 2001. The deal, which is slated to close in early 2017, is the latest in a spate of mergers involving suppliers to Boeing and Airbus Group, which are squeezing costs as they brace for slower growth following a decade-long sales cycle.
“It’s an opportunity to build a smarter plane,” said Richard Aboulafia, an aerospace analyst at Teal Group. “Given the pricing pressure, you’ll probably see more deals like this.”
B/E Aerospace is the largest supplier of aircraft cabin equipment, ranging from modular lavatories to luxurious seats as expensive as a Ferrari. On a proforma basis, the combined manufacturer would have had almost 30,000 employees.
Rockwell Collins has a base of business-aviation dealers that could offer to retrofit private jets with B/E’s interiors. The company has strong ties with airline customers that Rockwell Collins may be able to leverage to sell more of its avionics equipment.