Sept. 19--A decision by Boeing to end production of the C-17 Globemaster, the military's large transport aircraft, will lower yearly revenues at Pratt & Whitney by $400 million, one defense analyst estimated Thursday.
Pratt, a division of Hartford-based United Technologies Corp., sells four of its F117 turbofan engines for each of the 10 planes that Boeing delivers annually.
Boeing made its final Pentagon delivery of the transport aircraft a week ago, an event wrapping up the decades-long military program. Company executives said that international orders were insufficient to keep the line open beyond 2015.
"Budgets cannot support additional purchases in the timing required to keep the production line open," said Dennis Muilenburg, chief executive of Boeing's defense business, which expects to continue providing support and maintenance for the planes. He called the decision "very difficult but necessary."
The final 22 deliveries over the next two years will be to a number of international customers, including 10 to India, two to an unnamed international customer, and 13 that haven't been sold yet, according to Boeing.
"What's more, here in the United States the sequestration situation has created significant planning difficulties for our customers and the entire aerospace industry," Muilenburg said in a written statement.
Bloomberg defense analyst George Ferguson prices the F117 engines at $10 million apiece, putting the impact of the program's end at $400 million a year. Pratt declined to disclose the price of the F117, which is the military verison of Pratt's PW-2000 designed for Boeing's 757.
In all of last year, Pratt reported about $14 billion in sales, putting the estimated $400 million hit at 2.8 percent of total revenue.
Boeing said Wednesday that it expects to accept a $100 million charge this quarter relating to the decision and that workforce reductions will begin in early 2014, continuing through the production close in late 2015. More than 3,000 Boeing employees work on the C-17 program, in Long Beach, Macon, Ga., Mesa, Ariz., and St. Louis. The program's hundreds of suppliers, including Pratt, support 20,000 employees.
Boeing expects to make up the lost $2 billion of C-17 sales as its KC-46 tanker program ramps up, Bloomberg's Ferguson said in a research report.
The upside of the new KC-46 program might be limited, though, for Pratt, which also provides engines for the tanker. The East Hartford-enginemaker only sells two engines per plane, compared to the quartet for each C-17.
Shawn Watson, a spokesman for Pratt's military business, said that the company has "a pretty diverse portfolio of new engines coming down the line," and referred questions about the decision to end production of the aircraft line to Boeing.
Boeing spokeswoman Cindy Anderson said that the company has known for a long time that the Air Force order for C-17s would wrap up, and that "because of the length of time to build a C-17, we're making the announcement now."
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