Delay in A380 Delay Disappointing, But Not Disastrous for Pratt

Wrapped in yellow Kevlar and trimmed in lime green, the jet engine flourishes its array of titanium fan blades like the petals of a flower.

The engine is a Pratt & Whitney GP7200. It hangs from a monorail inside Pratt's jet engine test center in Middletown, swaying gently. The serenity of the scene belies the engine's awesome purpose -- propelling the world's largest passenger airplane, the Airbus A380, across the vast spaces between Singapore and London, Los Angeles and Sydney, and other distant cities of the world.

The engine on display will be shipped from Middletown, where testing and other final preparations take place, to an Airbus facility in France. There it will be attached to the wing of an A380 ordered by Emirates, the Dubai-based airline with the biggest order for both the jetliner and the engine. The GP7200 is made by the Engine Alliance, a 50-50 partnership between Pratt and General Electric. Rolls-Royce makes a rival engine for the A380 called the Trent 900.

The Engine Alliance, like Rolls-Royce, expected its engine would already be in service with commercial airlines. But because of a series of production delays at Airbus, deliveries of the A380, a 555-seat double-decker, are running two years behind schedule.

Singapore Airlines is in line to receive the first A380 in October. It will be powered by the Rolls-Royce engine. Emirates is in line for the first one powered by the GP7200, in August 2008 -- nearly two years late. Emirates thought it would have 18 of the aircraft by then.

``Airbus, as you might imagine, is extremely committed to keeping this schedule,'' said Mary Ellen Jones, senior vice president for marketing and sales for the Alliance.

So far, the Alliance has produced 10 GP7200s for testing purposes. It expects to deliver about 12 production model engines in 2007 and roughly 40 in 2008, according to James J. Moravecek, the Pratt executive who oversees the GP7200 program.

The consequences of the Airbus delays have been profound for the European airframe maker -- loss of reputation, competitive position and gobs of money.

Last November, FedEx Corp. canceled an order for 10 cargo versions of the A380, then placed an order with Boeing -- Airbus' archrival -- for 15 Boeing 777 freighters. Many remaining customers have demanded compensation for the delays.

The Airbus delays have hurt the engine-makers, too: FedEx was planning to use the Alliance's engine on its A380s and no longer needs them. Pratt had already acknowledged that slower-than-expected GP7200 production contributed to its decision to buy out 100 union workers.

It was reported last week that UPS, the Alliance's most recent customer for the GP7200 and the last remaining customer for the A380's cargo version, might cancel its order for 10 aircraft. UPS has denied the reports.

But the delays have so far been a disappointment for Pratt, not a disaster. By teaming up with GE, the company spread risk and development costs -- about $1 billion, according to the Alliance.

Pratt also has plenty of other business. The company's performance in the fourth quarter of 2006 helped its corporate parent, United Technologies Corp., deliver unexpectedly strong results. Major Pratt engine programs include engines for the F-15, F-16, and F-22 fighters, for example, and the popular V2500 for short-to-medium-range commercial aircraft, produced with partners, including Rolls-Royce.

Pratt also makes the primary engine for the military's Joint Strike Fighter, demand for which may reach 3,500 aircraft over the next 30 years, according to the plane's prime contractor, Lockheed Martin Corp.

In 2006, Pratt's annual operating profit rose 25 percent, to $1.8 billion, according to UTC's year-end financial results, reported last Tuesday.

In short, delayed revenue from the GP7200 does not appear to be jeopardizing the company's financial health.