Pratt & Whitney’s $10 billion bet on a new jet engine is faltering after a troubled rollout, and buyers are rushing to a General Electric model instead.
The GE turbine has won ten times as many orders this year to power a narrow-body Airbus plane on which the two suppliers compete head to head. Pratt has signed just one buyer in that span to supply its geared turbofan engine for the aircraft, according to data provided to Bloomberg by Flight Ascend Consultancy.
The figures paint a stark picture for Pratt and parent United Technologies Corp., which billed the so-called GTF as a technological breakthrough that was supposed to help reverse GE’s recent market dominance. Instead, weak demand for the engine is fueling doubts about the long-term payoff of Pratt’s most important product.
“It reflects a concern about the engine and where it’s going to go from its rather checkered start,” aviation consultant Robert Mann said. The GTF has “had its share of teething problems and those have yet to be sorted out. And even if sorted out, it’s delaying a lot of aircraft deliveries. It gives people who made the initial choice of the GTF pause.”
Customers’ decisions about engines for the Airbus A320neo are crucial, because of the one-on-one matchup with GE and the plane’s importance for airlines. Along with the Boeing Co. 737, the single-aisle A320 family is a workhorse of the global jetliner fleet, far outnumbering the wide-bodies used on long-haul routes. The A320neo, Airbus’s latest version of the aircraft, will be flying for decades. That represents a long-term revenue stream for engine makers, which rely partly on service deals to recoup heavy initial investments.
While the geared turbofan has met performance specifications in areas such as fuel burn, it has also been beset by manufacturing hurdles, delivery delays and technical glitches. Airlines such as IndiGo, India’s largest carrier, have been forced to ground planes because of Pratt’s problems, while Airbus is struggling to meet its delivery commitments for the A320neos. Pratt is rolling out fixes this year for durability issues affecting a carbon seal and combustor.
A slowdown in orders has been “deliberate to some extent”, as the company focuses on addressing the issues, United Technologies Chief Financial Officer Akhil Johri said in an interview last month. The Farmington, Connecticut-based company invested $10 billion to develop the engine.
Pratt, which also supplies the GTF to planemakers other than Airbus, has more than 8,000 orders on the books, Chris Calio, president of commercial engines, said in a statement. He reaffirmed the goal of producing 350 to 400 of the new engines this year.
Some airlines have been forced to take planes out of service while waiting for fixes. About 46 percent of A320neo jets powered by the GTF were out of service for at least one week in the past month, compared with just 9 percent of those using GE’s engine, according to a report Monday from UBS Group AG analyst David Strauss.
The geared turbofan competes to power the A320neo family with the Leap, a new engine from CFM International Inc., a joint venture of GE and France’s Safran SA. Pratt’s engine is also the lone option on planes such as Bombardier Inc.’s C Series, while the Leap is the exclusive power plant for Boeing’s 737 Max.
Pratt signed a deal this year with British Airways owner IAG SA to supply engines for 47 of the Airbus planes. Including an eight-plane cancellation in the first quarter, Pratt has signed net orders to power 39 A320neos in 2017, according to Flight Ascend data through early August. By contrast, the Leap was selected for 396 planes.
GE’s dominant performance came after it won 66 percent of the decisions last year, Flight Ascend data show. That’s pushed GE’s share of all A320neo engine orders to 60 percent, after running for years close to 55 percent.