Pratt: Firms may differ on re-engining

WASHINGTON (Reuters) - Engine maker Pratt & Whitney said EADS (EAD.PA) unit Airbus and its rival Boeing Co (BA.N) could make different decisions on whether to redesign their single-aisle A320 and 737 planes or use the same design and equip them with new engines.

Airbus has indicated it is leaning toward putting a new engine in the current design of its A320. Boeing has said its customers seem to favor a new plane, which would take longer to produce but could deliver better fuel efficiency, which is prized by the cash-strapped airline industry.

"It's conceivable they both could go different ways," Pratt President David Hess told the Reuters Aerospace and Defense Summit in Washington on Wednesday.

Billions of dollars in orders hinge on the decisions by Airbus and Boeing. The two largest commercial aircraft manufacturers have said they will announce their decisions this year.

Still, Hess said Pratt, a unit of United Technologies Corp (UTX.N), was continuing to develop next-generation engines that offer improved fuel efficiency.

"Sooner or later they are going to decide to do something, and we think we'll be ready and will continue to be in the lead with the best-technology engine that's out there," Hess said.

Pratt & Whitney partners with Rolls-Royce (RR.L) as part of a consortium supplying engines to Airbus single-aisle jets, known as International Aero Engines.

IAE competes on Airbus jets with another transatlantic consortium, CFM International, which is co-owned by General Electric (GE.N) and France's Safran (SAF.PA).

CFM has a monopoly on comparable Boeing planes.

IAE has however been hit by a split over engine strategy, with Rolls-Royce deciding to skip the re-engining project and get to work directly on the next generation of engines, which it believes could be more lucrative.

Hess said he hoped Germany's MTU Aero Engines (MTXGn.DE) and Japan's Aero Engines would join Pratt in to the re-engining project, leaving Rolls-Royce isolated over engine strategy.

Hess said he was disappointed at the surprisingly low number of orders for Bombardier's C-Series aircraft for which Pratt provides the engine.

Orders for the aircraft, which competes with Boeing's 737 and the A320 in the 100- to 149-seat segment, so far have failed to live up to expectations, totaling only about 90.

Bombardier blamed a lack of orders for the plane at the Farnborough Air Show in July on issues related to a support plan for the engine. At the Reuters summit, Hess shrugged off the complaint, calling it a "misunderstanding."

He said he expects more C-Series orders to be announced soon.

"I think they are important orders," Hess said.

Hess said Pratt expected its aftermarket business, or sales tied to retrofits and upgrades, to rise this year and beyond as air traffic and cargo demand picks up.

"We continue to see the recovery both in terms of leading indicators and ... to some degree reflected in some of our order streams too," Hess said.

Still, he added that Pratt, which had revenue of $12.6 billion last year, could undertake more head count reductions and consolidate operations to keep up profitability as defense spending growth slows.

(Reporting by Kyle Peterson and Karen Jacobs; editing by Matthew Lewis and Carol Bishopric)

(Additional reporting by Tim Hepher)