Guy Norris/LOS ANGELES
Pratt & Whitney expects to see its engine-services sales reach $1 billion this year as its Eagle Services business continues to expand in the repair and overhaul sectors.
Eagle Services generated roughly $600 million in 1996, representing around 10%of P&W's sales, but will have added another $400 million in revenues by the end of this year. Vice-president Jim Taiclet says that the longer-term aim is to double its size again, to account for 20-25% of P&W's revenues within the next few years.
The latest step in the expansion comes with the new Engineering Overhaul and Repair Center at the company's East Hartford, Connecticut, assembly site, which has just received US Federal Aviation Administration approval. It is being licensed to overhaul all makes of engines, not just P&W models, and is also capable of taking on overflow work from the company's overhaul site located at Cheshire, Connecticut.
Although most of the recent focus of the Eagle Services expansion strategy has been on overhaul, the new initiative is aimed at strengthening repair services as well, to compete with GE's aggressive drive in the sector. GE's acquisition of Greenwich/UNC in 1997 has left it with an aftermarket business worth around $4-5 billion a year, with repair and overhaul accounting for roughly half of that.
Airlines now carry out only one-third of their own repairs, says Taiclet, with the remainder shared between independents and the engine manufacturers. He adds that growth will come through expansion of repair shops and new acquisitions, such as the recent purchase of Howmet's aerofoil-refurbishment unit and Interturbine from the Flight Repair Group.
Meanwhile, the bulk of future growth in the overhaul sector is expected to come from a series of partnerships. "GE's goal is to acquire service shops, but our role is different," says Taiclet. "We want to develop partnerships with users, military and civil. We will partner in joint ventures with airlines like Singapore Airlines [SIA], or provide a material management programme where we provide repair material at a fixed price."
P&W says that 75% of overhaul visits are to third-party companies or the airline's own workshops, whereas 25% are to original-equipment manufacturers or "truly independent", non-airline companies.
"If we can form partnerships with 75% of the market, there's a much bigger potential, particularly if we can form partnerships with a prestige airline," says Taiclet.
Following the example set with the SIA venture, P&W Eagle Services is now "in discussion with four airlines in Western Europe", according to Taiclet. "We plan to develop this strategy around the world and come back to the USA. We will talk to airlines in China, Russia, India and Africa - the formula is straightforward. By the end of 1999, we hope to have the European partnership up and running, and the China partnership operating," he adds.
The series of overhaul-related partnerships are, in turn, expected to yield new repair business as well. "We plan to leverage our overhaul partnerships to develop repair partnerships," says Taiclet.
Source: Flight International
