Pratt CEO Warns Boeing On 737 MAX

September 6, 2011

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Boeing may be forced to cut short the lifespan of its just-announced 737 MAX aircraft and go back to the drawing board for a new plane to protect sales, the head of engine maker Pratt & Whitney said on Tuesday.

The warning flies in the face of a recent decision by Boeing to match European rival Airbus by putting new engines on its 737 jets to help airlines lower fuel costs, rather than investing more money and time in a completely new design.

Industry analysts say the decisions by Airbus and Boeing have defined the biggest segment of the plane market for the next 15 years -- but Pratt believes Boeing may not be able to wait that long because the engine it has chosen is too small.

"Time will tell. Boeing responded to pressure... and if they feel they don't have a competitive airplane against the A320neo, they may be forced to accelerate or look at their plans for a (new plane)," Pratt & Whitney chief executive David Hess said.

Pratt & Whitney competes with CFM to supply engines for the revamped Airbus A320neo. CFM has an exclusive deal for the 737 and its upgraded successor, the 737 MAX.

Hess said he was doubtful about Boeing's decision on the 737 MAX because the fan of CFM's LEAP-X engine would be 66-68 inches, compared with 81 inches on Pratt's engine for the A320neo, called the Geared Turbofan. The size of the fan affects thrust and efficiency.

"I would be surprised if it is 15 years before (Boeing) launch a... new narrow-body airplane," Hess said.

Boeing said it stood by its decision to re-engine the 737, which followed a lengthy study of another more radical option.

Hess gave figures indicating Pratt had sold some 400 Geared Turbofan engines since the eve of the Paris Air Show in June, when it announced cumulative orders and options for 1,200 engines for the A320neo and new market challengers.

Hess said on Tuesday that Pratt has now sold 1,600 of those engines, including options.

He expects Pratt would grab a market share of more than 50 percent against CFM on the A320neo.

Hess said revenue growth for engine spares would dip in the second half of 2011 but reaffirmed the company's forecast for "low-double-digit" growth in aftermarket revenues for the year.

"The first two quarters were quite strong but against very easy comparisons last year. The growth rates will be lower in the back half of the year, but in total we think that we are still on low-double-digit growth for the year," he said.