United Technologies Beats GE on F-16 Deal, People Say (Update1)
By Tony Capaccio and Rachel Layne
Aug. 23 (Bloomberg) -- United Technologies Corp., the world's third-largest maker of airplane engines, won a contract to supply turbines for as many as 36 F-16 fighter jets being bought by Pakistan, people familiar with the order said.
The company's Pratt & Whitney unit beat General Electric Co. for the engine deal, said five people with knowledge of the order who asked not to be named because it hasn't been announced. They declined to put a value on the transaction because the exact number of planes hasn't been determined.
An initial 18-engine order is worth about $200 million, said Teal Group analyst Richard Aboulafia. The award will boost Pratt & Whitney's engine business as production of Lockheed Martin Corp.'s F-16 slows in favor of its F-35 Lightning II, formerly known as the Joint Strike Fighter. Pratt & Whitney sells the main engine on older F-16s, including those used by Pakistan.
``It's tough to unseat an incumbent,'' Aboulafia said. ``But it is a good win. F-16 work is winding down, so it is essential for Pratt to avoid a trough until the JSF ramps up.''
The engine order may be announced next month in Pakistan, when the country's government is expected to sign its formal request for aircraft, engines and armaments, the officials said.
Pratt & Whitney spokeswoman Heather Summerer declined to comment, as did Rick Kennedy, a spokesman for Fairfield, Connecticut-based General Electric. Akram Shaheedi, Pakistan's press attache in Washington, didn't return a call seeking comment.
Shares of Hartford, Connecticut-based United Technologies, which trails GE and Rolls-Royce Group Plc in jet-engine sales, fell 13 cents to $60.77 at 4 p.m. in New York Stock Exchange composite trading. GE fell 17 cents to $33.79.
$5 Billion Package
Congress last month approved a basic arms package for Pakistan, valued at as much as $5 billion, including 18 new F-16 fighters with an option to buy 18 more. The single-engine aircraft were to be powered by either GE or Pratt & Whitney, the Pentagon said.
Aboulafia said the initial 18 engines are valued at about $200 million, and more than twice that when upgrades and spare parts are included. The F-16 deal ends a 15-year ban on sales of the fighter to Pakistan, an important ally in the fight against terrorism.
Pratt & Whitney is the sole engine provider for the F-35 Lightning II until 2012, when GE can compete with an engine made in a venture with London-based Rolls-Royce. GE is fighting in Congress to restore funding for a backup engine, which the Pentagon wants to eliminate to reduce costs.
Military Orders
Pratt & Whitney's military division provided about one-third of the engine maker's 2005 revenue of $9.3 billion. Military engines at GE made up $3.5 billion of the aviation division's $11.9 billion in sales last year.
The Pakistan transaction also includes 36 advanced pilot helmets that can display targeting information on the visor, as many as 500 of Chicago-based Boeing Co.'s kits to assemble satellite-guided bombs for ground attacks, and as many as 1,600 laser-guided bombs produced by Bethesda, Maryland-based Lockheed and Waltham, Massachusetts-based Raytheon Co.
The package also includes 700 bunker-buster, 2,000-pound BLU-109 bombs; 800 Mk-82 unguided munitions and 700 Raytheon air- to-air missiles.
http://quote.bloomberg.com/apps/news?pid=20601087&sid=a_cKQnpTO7Uc