United Technologies down on Pratt engine spares troubles
23 July 2014
United Technologies Corp was down the most in three months following a sales drop and profit decline at its Pratt & Whitney jet-engine unit, which suffered a couple of major reverses last quarter, Bloomberg reported.
United Technologies, based in Hartford, Connecticut, said orders for Pratt spares were down 6 per cent, part of a 1-per cent dip in net sales at the business. Operating profit in the unit was down 24 per cent in the second quarter even as companywide earnings beat analysts' estimates.
Aviation is one of the twin focal points for chief executive officer Louis Chenevert after acquisition of aerospace supplier Goodrich Corp for $16.5 billion in 2012 (See: United Technologies-Goodrich $16.5 bn deal receives conditional EU approval) and a corporate rejig which saw Otis elevators, Carrier climate-control and fire and security divisions emerge as one building-services business.
Pratt's challenges added to the company's concerns across several areas, including margin pressure in the Otis unit and decelerating organic growth, according to Nicholas Heymann, a William Blair & Co analyst in New York.
Pratt engines were involved in a fire on a Bombardier Inc C Series jet in May and on a US F-35 fighter in June.
Meanwhile Reuters reported that a fix for Pratt & Whitney's engine used in Bombardier Inc's new CSeries jet may not be needed on versions of the engine used in other aircraft.
Earlier this month, Pratt executives said the problem had to do with a seal in the oil system that would require a relatively minor adjustment. The aircraft had been grounded since late May following an engine failure during testing.
In addition to the CSeries, Pratt's new geared turbofan engine was offered on Airbus' A320neo narrow-body plane and other new regional jets. The engine was helping recovery of Pratt's commercial engine business.