In July 2008, when Pratt & Whitney launched its Geared Turbofan (GTF) commercial engine under the name PurePower PW1000G, it claimed these engines to be 10-15% more fuel efficient than existing engines on regional and single-aisle aircraft. These engines were also promised to be much quieter and have significantly lower emission levels. Airlines, which at the time, were reeling under thin margins from high and volatile jet fuel prices showed tremendous interest in this new engine series. As a result, aircraft manufacturers including Airbus, Mitsubishi, Bombardier, Embraer and others, moved quickly to place these engines on their airplanes.
Today, the PurePower PW1000G engine has been selected as the exclusive engine for Mitsubishi Regional Jet (MRJ), Bombardier CSeries and Embraer’s second generation of E-jets, and as an engine option on the Airbus A320neo and the Russian Irkut MC-21. Through 2012, these engines had garnered over 3,500 orders (including options), making it one of the most successful aircraft engine launches in history.  The engine’s development is also on track, and as the company makes deliveries against these orders over the coming years, Pratt & Whitney estimates its revenues to grow by nearly 70% in 2020, from around $14 billion in 2012. 
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Pratt & Whitney is a unit of United Technologies (NYSE:UTX) and it designs, manufactures and sells aircraft engines for military, commercial, business jet and general aviation markets. It constitutes around 23% of United Technologies’ (UTC) value, according to our estimates.
We currently have a stock price estimate of $102 for UTC, approximately 10% above its current market price.
Development Status Of The PurePower Engine Series
The PurePower Geared Turbofan engine increases fuel economy by increasing bypass – the amount of air that the fan at the front of the jet engine blows past the engine. However, the issue arising from higher the bypass is that bypass fans work better at lower speeds while turbines work better at higher speeds. So, the PurePower engines for the first time introduced a gear box between the turbine shaft and the front fan to slow down the latter. In this way it achieved improved fuel efficiency.
In August 2010, the PurePower engine model selected by Bombardier for the new CSeries passenger aircraft began its testing, and in June 2011 this engine model undertook its first flight. In May 2012, the PurePower engine model selected by Mitsubishi for MRJ undertook its first flight, and in December 2012 the engine model selected by Airbus for A320neo began its testing. While the Bombardier CSeries is scheduled to enter service in 2013, Airbus A320neo and MRJ will enter service in 2015.
Pratt & Whitney’s PurePower Competes With GE/Snecma’s LEAP Engines
The Pratt & Whitney PurePower PW1000G engines compete with CFM International’s LEAP engines for leadership in the commercial aviation engine market. CFM International is a 50-50 joint venture between GE Aviation and Snecma of France. The LEAP engines also promise fuel savings of 15% compared to the current generation of CFM56 engines, which are present on Boeing 737 and Airbus A320.
Currently, CFM International’s LEAP engines lead Pratt & Whitney’s PurePower engines in this market, with an exclusive presence on the Boeing 737MAX and China’s Comac C919, and as an engine option on the Airbus A320neo. Overall, LEAP engines have received orders totaling around 4,500.  Nonetheless, PurePower engine series remains a major player in the commercial aviation engine market and is likely to maintain its position over the coming years.
In January 2013, Pratt & Whitney Beat GE Aviation To Power Embraer’s E-Jets G2
Pratt & Whitney at some instances has beaten its larger commercial rival, GE Aviation/Snecma, to bag some major contracts. In January 2013, Embraer selected Pratt & Whitney’s PurePower engines to power its second generation of E-jets, which are scheduled to enter service in 2018. Embraer’s current generation of E-jets are powered by GE’s CF34 engines. But, PurePower’s superior performance swung the battle in favor of Pratt & Whitney to get a position on the second generation of E-jets. Paulo Cesar Silva, commercial aviation president for Embraer said, “We do appreciate the relationship with GE, but the proposition that Pratt is offering seems to us [to be the] one that brings more value to our customers based on the fuel burn and maintenance costs. So we believe it is the best option.” 
All in all, over the coming years, PurePower engines are expected to become a leading engine family for Pratt & Whitney and drive growth in its revenues and profits.Notes:
- UTC’s investor and analyst meet, March 14 2013, www.utc.com [↩] [↩]
- New C919 orders push total LEAP orders past 4,300 engines, November 14 2012, www.geaviation.com [↩]
- Embraer Picks Pratt & Whitney Engine For New E-Jet, January 8 2012, www.aviationweek.com [↩]