Specialist
Former Deputy VP at Pratt & Whitney (Raytheon Technologies Corp)
Agenda
- Competitive landscape highlighting key secular trends and demand analysis
- Next-generation platforms and technological innovation opportunities for Pratt & Whitney (NYSE: RTX)
- Growth opportunities including operational efficiencies and customer relationships
- Maintenance and lessor market outlook
Questions
1.
Can you describe the operating environment for aerospace and defence engine OEMs [original equipment manufacturers]? Which key secular trends in the commercial and defence markets should we monitor?
2.
How important do you expect some of these increased investments in R&D to be for the industry, considering the pressure on R&D spend you mentioned?
3.
How would you describe Pratt & Whitney’s positioning vs the three major players? How is it addressing secular dynamics and the pressure on R&D?
4.
How would you characterise Pratt & Whitney’s relationships with its customers, such as Boeing? What type of fallout do you expect for Pratt & Whitney following the recent incident with the Boeing 777? How might that affect its potential to gain wide-body contracts?
5.
How could Pratt & Whitney continue gaining market share on the A320, which you mentioned the company has managed over the past year-and-a-half or so?
6.
Do you expect any partnerships between any engine OEMs as we come out of this volatile period, given the difficulties around R&D CAPEX?
7.
Do you think Pratt & Whitney could ever be divested from Raytheon, in a worst-case scenario, given the recent Boeing 777 incident and considering that Pratt & Whitney accounted for almost 30% of its 2020 sales?
8.
Can you expand on how Pratt & Whitney’s GTF engine is changing the commercial engine landscape? How do you expect the competitive landscape to evolve over the next few years, considering the main demand drivers?
9.
How could you explain the higher engine repairs per flight hour for the geared turbofan vs the LEAP over the past few years? Is there a significant difference in the life cycle cost for a GTF engine vs a LEAP?
10.
You noted the geared turbofan’s increased fuel efficiency. Where do you think the next major focus will be – fuel efficiency, CO2 emissions or weight? How do you expect it to play into customer appetites?
11.
What are the cost benefits of engine modification? How should we be thinking about modernisation versus a clean-sheet design provide an opportunity to enhance the net present value and eliminate NRE [non recurring engineering] costs?
12.
How does this tie into the modernisation of the B-52 bomber, where the air force have open competition for a new engine? How are Pratt & Whitney’s attempts to potentially reduce NRE costs impacted by some of the offerings that have neem presented to the Air Force already?
13.
How do you expect maintenance contracts to shift post-pandemic? Pratt & Whitney took a loss on some contract restructuring in Q4 2020.
14.
How do you think the MRO [maintenance, repair and overhaul] landscape will continue to change? How can engine OEMs recapture aftermarket work amid an increase in third-party providers?
15.
Is there any pressure on the MRO market from some of the leasing companies and airline relationships due to the pandemic, such as deferred costs?
16.
How significant is the build-up of excess inventory and USM [used services material]? How might USM impact an engine’s residual value in the MRO market as some of these newer platforms are adopted and older planes and engines experience reduced demand?
17.
Where would you identify the most opportunity for engine OEMs to increase operational efficiency? Where can they save on engine production costs? What would you estimate as the ideal margins for an engine’s production?
18.
Besides power by the hour, are there any other realistic options for OEMs to secure contracts on new platforms, considering the volatility of contract structures throughout the pandemic?
19.
Is there anything that you would like to add that we have not discussed already?
20.
What questions should investors be asking about Pratt & Whitney in 2021? What is your short-term outlook?
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