WASHINGTON (Reuters) - Pratt & Whitney warned Boeing on Tuesday it may have to rethink its strategy for competing with Airbus in a $2 trillion segment of the jet market because the engine it has chosen from rival GE (GE.N) is too small.
Matching plans by Airbus EAD.PA to upgrade its A320 with new engines, Boeing (BA.N) has come up with plans to revamp its best-selling 737 medium-haul jet with new engines from CFM, a joint venture between GE and France’s Safran (SAF.PA).
By doing so, it has put on the back burner alternative proposals to invest more time and money in an all-new airplane.
Analysts say the decisions have defined until 2025 a portion of the market valued at $2 trillion over 20 years. But Pratt & Whitney, a leader in combat engines and which once dominated civil markets, believes Boeing may not be able to wait that long.
“Time will tell. Boeing responded to pressure ... and if they feel they don’t have a competitive airplane against the A320neo they may be forced to accelerate or look at their plans for a (new plane),” Pratt & Whitney Chief Executive David Hess said.
“I would be surprised if it is 15 years before (Boeing) launch a ... new narrowbody airplane,” Hess told the annual Reuters Aerospace & Defense Summit.
Pratt & Whitney competes with CFM to supply engines for the revamped Airbus A320neo. CFM has an exclusive deal for the 737 and its upgraded successor 737 MAX.
United Technologies (UTX.N) unit Pratt & Whitney has an interest in questioning the longevity of Boeing’s latest project, since it can only enter the 737 market once Boeing switches to a radically new model due to an exclusivity agreement between Boeing and CFM for the existing model.
Hess’s comments will expand an already fierce debate about whether it is better to stick with the proven concepts such as CFM engines or back new engine architecture offered by Pratt’s latest generation of engines, known as Geared Turbofan.
Billions of dollars in engine sales and long-term repair contracts are at stake in the rival boasts of engineers.
A main reason for Hess’s skepticism relates to engine size.
CFM engines on existing Boeings have a flat-bottomed casing to help them fit under the wing, which is lower to the ground than that of the A320. This gives the engines the distinctive squashed look visible to passengers, but limits the scope for souping up the engine without costly changes to the airframe.
Boeing and CFM plan to increase the fan size slightly to 66 or 68 inches, yet the A320 engine’s fan will be up to 81 inches. The size of the fan affects thrust and efficiency, but the bigger the fan the more weight the aircraft also has to carry, so engine-makers and plane-makers have to find the best compromise.
“Boeing has made it clear it is going to be a minimum-change airplane and I don’t see them doing anything else for the airplane that is going to result in substantial fuel benefit, so it is going to have to come from the engine, and I will be happy to take the Geared Turbofan’s chances against a 66- or 68-inch Leap-X any day,” Hess said.
Boeing stood by its decision to re-engine the 737 and repeated it would be 7 percent more efficient than the A320neo.
“The 737 MAX delivers the big savings in fuel that airlines require for the future,” said spokesman Marc Birtel.
“With regard to future product development, we don’t see a new small airplane emerging until well into the next decade.”
CFM says its 737 engine variant is optimized for that plane.
Boeing and Airbus are locked in a battle to sell their revamped models, triggering a secondary competition between CFM and Pratt & Whitney to win engine deals for the A320neo.
Hess gave figures indicating Pratt & Whitney had sold some 400 geared turbofan engines since the eve of the Paris Air Show in June, when it announced cumulative orders and options for 1,200 engines for the A320neo and new market challengers.
The United Technologies unit has now sold 1,600 of those engines including options, Hess said on Tuesday.
He expected Pratt & Whitney would grab a market share of more than 50 percent against CFM on the A320neo.
Of the 1,300 twin-engined A320neo aircraft sold by Airbus, 500 had yet to see an engine selection, including 100 ordered by AMR AMR.N unit American Airlines. “We are certainly going after the AMR order,” Hess said.
Hess defended the Bombardier (BBDb.TO) CSeries, a challenger to the 737 and A320 that also carries the latest Pratt engines but whose sales have fallen short of expectations.
Delta Air Lines (DAL.N) looked at the CSeries before placing a recent order for 100 Boeing 737’s, but has decided to defer further airplane orders for 2-3 years, he said.
Hess said aviation demand remained robust despite alarm bells in the rest of the manufacturing sector as the economic recovery falters. U.S. airlines are replacing old fleets to save fuel while emerging markets have produced a surge in new demand.
Hess predicted revenue growth for engine spares would dip in the second half of 2011 but reaffirmed a forecast for “low double-digit” growth in aftermarket revenues for the whole year.
Additional reporting by Soyoung Kim and Malathi Nayak in Washington; Editing by Phil Berlowitz