On the Record with
LOUIS CHENEVERT, PRESIDENT, PRATT & WHITNEY

"The reports of my death are greatly exaggerated."

Pratt & Whitney, once the world's largest aero engine manufacturer but now No. 3 behind GE Aircraft Engines and Rolls-Royce, has unveiled an ambitious plan to double revenues and profits over the next five years and expand its reach into new areas.

While critics point to the almost complete loss of its traditional market for narrowbody airliners to CFM, and its decision not to compete in the most prestigious--and expensive--giant engine class above 110,000 lb thrust, Pratt has been reinventing itself.

"Our roadmap, developed with the full support of the executive committee, is a vision of where we want to go," Pratt & Whitney president Louis Chenevert told Show News. He plans to parley this year's expected profit of $1.1 billion on revenues of $7.7 billion into $2 billion and $15 billion respectively by the end of 2004.

"It is a real stretch target that says we have to grow the business. We're looking at competitive new engines, a new product line, growth opportunities in the military, and acquisition opportunities-that's how you grow this way.

"My focus is on developing the right products for the future, and growing the top line. It is very realistic to think of returns of 15-16%," he said. Pratt will not, however, in the next five years match the returns of 20% scored by rival GE, which Chenevert attributes to the parts and support business generated by the vast numbers of CFM56 and CF34 airline and F404 fighter engines in service.

Pratt & Whitney has, in effect, become one company instead of several divisions that operated almost independently in airline engines, fighter engines, small turbofans and turboprops (Pratt & Whitney Canada), and in the aftermarket. Pulling them all together is a new Enterprise Resource Planning system that will replace 1,000 different computer systems with one integrated system, allowing everyone to work with the same data and enabling a strong push into E-commerce.

"You can start seeing that what we put down on the roadmap we've acted upon," Chenevert pointed out. "We have started to take dramatic steps to achieve a different position in the market which means not only strengthening but also broadening our portfolio."
Moves in the last few months include:

• Formation of Small Military Engines in the U.S. to extend Pratt's reach into the U.S. military helicopter and turboprop markets. This combines the government procurement expertise of the fighter business with Pratt and Whitney Canada's expertise in small engines.
• o Partnerships with GE Aircraft Engines on developing a replacement for the T700 helicopter engine, and with Teledyne on engines for UAVs.
• Plans for a full presence in the regional jet segment, challenging the wildly successful GE CF34 with a new, geared turbofan for the 50-100 passenger market. "We have invested more than half a billion dollars in geared technology," said Chenevert. "We are convinced it is the solution for lower noise, lower emissions, and improved fuel burn." The geared turbofan engine will be unveiled here at Farnborough.
• New rocket launcher engines. The Space Propulsion business aims to boost sales to $1.2 billion a year over five years, with $700 million coming from acquisitions and partnerships. "It's a great business, and we will be a player," said Chenevert.
• Expansion of Pratt's aftermarket business, including participation in a new "Nose to Tail" airframe, engine and systems service with KLM, and a push into overhauling competitors' engines through joint ventures and purchases such as that earlier this year of Braathens CFM engine shop in Norway. Pratt will top $1 billion in aftermarket business this year (not including sales of parts), and is aiming for $2 billion by 2003. Chenevert claims that UTC has the world's greatest aerospace aftermarket activity of any company, with Pratt and Hamilton Sundstrand together racking up $5-6 billion a year (including spares) versus $4.8-5 billion at GE. "This is an area where we intend to be very aggressive," he said.
• Progress with the PW6000 engine, Pratt's re-entry into the narrowbody market. Seven of the eight customers for the 100-passenger Airbus A318 have chosen the PW6000, and Pratt is hoping the proposed 100-passenger Bombardier BRJ-X regional airliner will be its second application.
• Progress on Very Large Engines: Through its Alliance Partnership with GE to develop the GP7000 engine, Pratt is fully covered on both the Airbus A3XX and the 747X stretch. The PW4000 remains the highest-certified thrust engine flying on the Boeing 777, at 98,000 pounds, and the 112-inch fan version last month marked its five-year anniversary. Although Pratt hasn't announced the sale of a PW4000 on a Boeing 777 for just over a year, it is holding a 33% share of firm orders in that market. More than 2,000 of the 94-inch fan PW4000s are now in service worldwide on Airbus A300/310, Boeing 767 and 747-400 airliners.

By John Morris