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On the Record
Louis Chênevert, President, Pratt & Whitney
Maintenance, repair and overhaul services have taken over the driving seat as engine maker Pratt & Whitney pursues an aggressive strategy for double-digit growth.
MRO is now a core business, with parts and services accounting for nearly 60% of last year’s record revenues of $8.3 billion.
“That’s up from 45% in the early ’90s; the growth has been aggressive,” according to Pratt & Whitney president Louis Chênevert, who led the transformation of the warranty and spare parts adjunct to engine sales into a comprehensive MRO services business.
Pratt is now accelerating that strategy, investing heavily in engine repair and business software technology (such as ERP, logistics and analytical tools), the ability to customize services and products to win more fleet programs, and targeting overhaul and repair of rival CFM56 turbofans.
The supply of commercial engines remains a crucial part of Pratt & Whitney’s business, but the company’s decision not to invest in a new powerplant for the Boeing 787 caused a reassessment of priorities for the future. It will be several years until the soaring eagle gets a chance to power the next generation replacements for the Boeing 737 and Airbus A320 single-aisle families; in the meantime its installed base will remain flat at around 14,000 engines as JT8Ds and JT9Ds are retired and IAE V2500s, GP7200s and PW6000s come on stream.
Pratt currently maintains about 20% of the V2500s and aims to increase its share to 30% as another 1,000 engines join the 2,500 already in airline service. The record $2 billion fleet management contract signed last year with United Airlines covering more than 300 V2500 engines added about two per cent to its market share.
But maintaining the new engines alone will not fuel double-digit growth, so Pratt is also looking to service the CFM56, of which 18,000 will be in service within the next five years. Full repair capability on all models will come on stream at the end of this year, and Pratt intends to fill gaps in its worldwide CFM56 overhaul network in the U.S. and Asia.
Value is a driving watchword in Chênevert’s office.
“We’ve developed great repairs, great solutions that allow us to package value for the customer,” he says (repaired parts typically cost half as much as a new part; fleet management can cut maintenance times and lean out inventory).
“More and more customers today want to see those value solutions, whether it’s an airline or the chief executive of a company who wants his business jet maintained. Everywhere we are seeing the demand for a comprehensive service solution.”
That includes the military as well as the airlines.
“Today we have partnered with the military to provide a value solution,” Chênevert says. “The C-17 Globemaster III is a good example — we and Boeing maintain the whole system: Boeing does the airframe, Pratt (and partner United Airlines) do the F117 engines — there are more than 650 in the fleet. Even through the (Iraq) war we’ve maintained all the level of spares the Air Force is looking for.
“We like that business model, and I think it’s fair to say the customer also sees the value.”
Chênevert cites Pratt & Whitney’s company-wide ERP system (by SAP) as a competitive advantage. “We have a single platform across the company and our aftermarket network. I tell you, this is the best tool set we have created in the company that is so aligned to understanding customer needs,” he says.
Coupled with Pratt’s leveraging its OEM engineering skills in materials and coatings to develop new repairs, Pratt has two of the most powerful tools possible “to give the best value for the customer,” he maintains.
None of it comes cheaply. Pratt will spend significantly this year on R&D and repair technology in its services business, a tenfold jump from just a few years ago.
“We have invested significant amounts of money on the MRO segment,” Chênevert says. “We spend major money to create those value solutions, and that’s why our market share has grown.” —John Morris
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