Pratt & Whitney cuts 2016 engine delivery target by 25%

Beset by problems, most recently relating to a cooling system inside the turbine which had the potential to affect startup times, Pratt & Whitney has had to drastically reduce its target for engine output to 150 units in 2016, down from an originally estimated 200. Connecticut-based United Technologies, the parent company of Pratt & Whitney, is heavily dependent on the success of the geared turbofan engine having, through Pratt & Whitney, invested over US$10 billion over the last two decades in the development of the engine. For airlines, the engine promises dramatic cuts in fuel use, emissions and noise over previous-generation models.
Pratt & Whitney’s CEO, Greg Hayes, announced that the engine maker will only deliver 150 of the targeted 200 engines this year, indicating that discussions had been held with airlines and plane manufacturers to adjust schedules.
“Nobody’s happy,” Hayes said in a presentation at a conference in Dana Point, California, on Friday. “The airlines aren’t happy they’re not getting the engines. We’re not happy we’re not delivering.”
United Technologies share price fell 2.5% to US$100.10 at the close in New York on September 16, the sharpest drop in the Dow Jones Industrial Average. Consequently, the stock’s year-to-date gain was reduced to 4.2%, compared with a 4.7% gain in the Standard & Poor’s 500 Index.
Another setback for the engine maker was that last week, Bombardier slashed the delivery forecast for its new C Series aircraft and blamed this on delays in receiving engines from Pratt & Whitney.
Hayes also advised that the engine has about 800 parts, and difficulties with about five of those have been causing problems that have slowed down production. One problem in particular is that the fan blades now take about 60 days to produce owing to the complex technology, a time scale which was originally estimated at about 30 days.
Hayes added that engines typically generate the majority of their profit over the long term, including after-market work, making costly early deliveries “a bad news story for Pratt & Whitney financially.”