UTC eyes 30 percent F-35 fighter engine cost drop
WASHINGTON (Reuters) - United Technologies Corp (UTX.N) expects to pare costs as much as 30 percent over time on the engine it is building for the world's biggest fighter aircraft program, the board chairman told Reuters Wednesday.
The cost of the F135 engine being built by the company's Pratt & Whitney unit is at the heart of a battle with the rival engine team of General Electric Co (GE.N) and Rolls-Royce Group Plc (RR.L).
At stake is a potential $100 billion market to power Lockheed Martin's F-35 Joint Strike Fighter, the Pentagon's costliest arms-buying program. The Obama administration is seeking to terminate the alternate GE-Rolls Royce engine on the ground it is superfluous and would not yield any cost savings.
"There will be a time when 30 percent happens," George David, the board chairman, said in an interview after speaking about energy efficiency at the Peterson Institute for International Economics.
He said such economies were typical from the learning curve on an aerospace program "when you build volume."
"You get numbers like that," he said. Pratt is to deliver its first seven production engines this year for the F-35, which is in early stages of production.
The Pentagon has pressed Pratt to wring out cost savings of about 30 percent, akin to what it achieved over time on the F119 engine that powers Lockheed's F-22 fighter, Air Force Major General C.D. Moore, the F-35 program's deputy executive officer, told Reuters last week.
David described the F135 engine program as East Hartford, Connecticut-based Pratt's best ever and discounted a recent mishap played up by political backers of the alternate engine.
"In my experience this is the most remarkable development program we've ever done," he said.
The test problem, which occurred September 11, was "usual, ordinary, normal," David said. "It's kind of a development thing that happens. It's not of any consequence. It's readily fixed. As technical problems go, this is real little."
A GE spokesman and the Pentagon's F-35 program office did not immediately return calls seeking comment on David's remarks.
Erin Dick, a Pratt spokeswoman, said the mishap appeared to have been caused by a worn fitting called a bushing that holds other parts together.
The company has said it will not delay the engine or the radar-evading F-35, three models of which are being built to replace at least 13 types of warplanes for 11 nations initially. At a projected cost of about $300 billion over two decades, the United States currently plans to buy 2,443 F-35s for the Air Force, Navy and Marine Corps.
Eight countries are F-35 co-development partners: Britain, Canada, Italy, Denmark, Netherlands, Norway, Turkey and Australia.
Rep. Neil Abercrombie, chairman of the House of Representatives Armed Services air and land subcommittee, wrote to fellow lawmakers that the F135 engine mishap showed that an alternate, interchangeable engine was necessary.
The House voted in July to add $560 million for development of the second engine despite a threat that President Barack Obama would veto any defense spending bill funding it. The Senate added no money. House-Senate negotiators are to iron out their differences in coming days for a fiscal 2010 Pentagon funding bill.
On September 1, GE and Rolls-Royce offered the Pentagon a fixed-price contract for a batch of their F136 engines in a drive to save their program.
William Begert, head of business development for Pratt, told reporters on September 15 that his company had proposed a contract for 37 of its F135 engines that trimmed 10 percent from the last batch.
United Technologies shares fell 49 cents to close at $62.74, down 0.77 percent on the New York Stock Exchange. GE dropped 1 cent to close at $17. Rolls-Royce Group rose 4.4 pence, or 0.93 percent, to close at 480 pence on the London Stock Exchange.
(Reporting by Jim Wolf; editing by Steve Orlofsky)
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