United Tech CEO Says Airbus Engine Decision May Slip
Airbus SAS’s plan to decide this year whether to put new engines on single-aisle aircraft “could slip” into 2011 as the planemaker evaluates resources, United Technologies Corp.’s chief executive officer said today.
“Airbus has near-term issues with commitment of resources,” Louis Chenevert said at a Goldman Sachs investor conference.
Airbus and Boeing Co. are evaluating the future of their single-aisle aircraft as customers seek ways to cut fuel bills with more efficient engines. While installing new engines would cost less than building new jets, planemakers are grappling with other product lines, in Airbus’s case the A350, A380 and A400M models, Chief Executive Officer Tom Enders said last month.
United Technologies’ Pratt & Whitney unit’s new PurePower geared turbofan engine would be a choice for the Airbus plane, called the Neo. If selected, it would mark Pratt’s return as a solo enginemaker to the biggest slice of the commercial aerospace market for the first time in three decades.
“They want to do this program, and my discussions with them show that they want to do this program with the right resources,” Chenevert said.
Should Airbus decide not to move ahead, Bombardier Inc.’s CSeries model, which offers only the PurePower engine, should see more orders than anticipated as airlines look for more efficient aircraft, Chenevert said. Some airline executives want to see the Neo model make it to market “sooner rather than later,” he said.
‘Wait-and-Hold’
“With the expectation that something will happen with the Neo, people are in a wait-and-hold” mode before they decide which aircraft to purchase, he said.
Pratt & Whitney’s engine would compete with a new model from CFM International, the venture from General Electric Co. and France’s Safran SA.
United Technologies, based in Hartford, Connecticut, is also the manufacturer of Hamilton aerospace systems, Otis elevators, Carrier air conditioners, Sikorsky helicopters and UTC Fire & Security products.
Chenevert said he doesn’t need large acquisitions to increase profit. Potential sellers still want more than he’s willing to pay, he said, referring to the gap as a “disconnect.” There continue to be “bolt-on” opportunities in fire and security, and in aerospace parts and services, he said.
“My stock is a great deal to buy back at this price level versus an acquisition,” he said.
United Technologies fell 20 cents to $75.05 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have climbed 8.1 percent this year.
To contact the reporter on this story: Rachel Layne in Boston at rlayne@bloomberg.net.
To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net.
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