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Pratt & Whitney Ramps Up Aftermarket For GTF

Matthew Bromberg leads Pratt & Whitney’s aftermarket organization, which supports about 10,000 P&W engines at 20 facilities.

Matthew Bromberg leads Pratt & Whitney’s aftermarket organization, which supports about 10,000 P&W engines at 20 facilities. At the same time, the OEM is ramping up for production of the geared turbofan, which is expected to enter service in the fourth quarter of this year. He recently met with MRO Chief Editor Lee Ann Shay.

AW&ST: Please describe your operations today.

Bromberg: Pratt & Whitney is at an inflection point. First, Pratt & Whitney’s installed base is growing for first time in many years. We are supporting roughly 10,000 engines. But we’ve sold 6,500 geared turbofans (GTF) and almost 2,000 V2500s—so 8,500 engines in our backlog—and we will start delivering this year. Our backlog is about as big as the installed base. From an aftermarket perspective, that’s exciting because up until now, we’ve been sizing ourselves for a declining installed base—and now we’re going to size ourselves for an increasing one.

Another inflection point is that the fleet is going to get younger for the first time in many years. The average age of the PW4000 is 18 years. The V2500’s average age is eight years. Another inflection is that we will shift more than 50% of our level of effort to services. For the PW4000, 40-50% of the engines are under fleet service contracts; for the V2500, that is 60% but it will grow to 80%. For the GP7200, it’s 75-80% and for the GTF it’s 80% under a fleet care arrangement. 

 

How are you preparing for the geared turbofan entry into service?

We are ready on Day One with a global open network to support GTF operators. We have a large installed base, but 40% of GTF customers are new to Pratt & Whitney, so they are new to us, to our field reps and to our network. We want to make sure we’re ready to support them across the globe. We have a global network, and that means several things. It means on the line (field support, line maintenance), a 24/7 global operations center, a logistics organization and our MRO network. It’s not just P&W that will be ready; it also will be our partners MTU and Japan Aero Engines Corp., so three engine centers will be ready to deal with any early technical issues that arise. That’s far more capacity than we’ll need because we don’t expect the full aftermarket to start until 5-7 years after entry into service. Behind the front lines, we have a network of 15 repair centers tooling up to repair various parts on the GTF engine in advance of when we need it, and stocking spare engines and parts.

 

Power-by-the-hour contracts are growing, but they can cause consternation . . .

There has been healthy tension in the transactional MRO market for many years. The shop visit itself drives the workscope, then the material consumption starts the tension between airlines and us. That’s been going on for 20 years. Over the past 10-15 years, these fleet-care programs have risen in popularity because they provide risk reduction for the operators and they align incentives between the operators and us. We don’t want the engine to go into the shop—neither do they. Fleet care programs try to keep engines on wing longer because engine swaps are disruptive to logistics, stands, tooling etc. It’s an important risk-transfer proposition.

As power-by-the-hour agreements become more sophisticated, there’s an area of tension developing between the OEM and the operator. In the ideal world, the operator will pay a dollar-per-hour rate and leave it up to us to maintain it. But in reality, many operators want to dictate removals or become involved in the workscope of the engine. That creates tension because if you’re not going to transfer all of the risk and give up the flexibility you had with a transactional model, you’re not exactly subscribing to a full power-by- the-hour agreement. We work through that every day—and I tell operators I’m happy to yield back certain flexibility but then they have to take back some of the financial risk if they’re going to dictate removals or workscope. In some cases, operators are migrating back to a transactional model, if they want to be more involved. There’s an interesting pendulum going on.

 

Where will the power-by-the-hour agreement pendulum end up?

I think airlines will bifurcate—some will migrate to full power-by-the-hour agreements where we take on all the risk, and at the other end of the spectrum, you have a full transactional model where they make all of the decisions and we’ll support them. Then there will be this third variant, where if they add risk to the equation and want flexibility, we can accommodate that; but we just have to charge for that in the rate.

The reason we need flexibility is because that’s how we optimize the rate. If you have the flexibility of when the engine comes off and to which engine center it goes and the workscope that goes into it, you can optimize the rate so it’s most cost-effective. If you start putting constraints on it, we can handle it, but it’s going to add costs to the overall program.

 

When you took on this role, you started realigning the aftermarket organization to one P&L. Where are you with that?

We had 24 different profit-and-loss centers—and that made sense if you think about how the aftermarket evolved. It was a transactional model. Some customers came through an engine center and others were buying spare parts. As you shift to a full-service model, customers have one contact manager and they expect everything to act behind the scenes. So when you want everything to operate seamlessly behind the scenes, you don’t want individual P&Ls that are trying to differentiate between internal transfer and internal transaction versus an external transaction. It was designed as a two-year transformation—and we’re about halfway through.

 

What are the results?

We started with the Singapore engine center—the PW4000—last year so that’s about 6-9 months ahead of the others. We already reduced our turnaround time on the three variants on average 15% last year. We had a target of 20% over the two years and we’re well on track to meeting or exceeding that this year. For the PW4000, which is in its last 10 years of life, operators have a lot of choices, and now we’re able to compete aggressively and win in that transactional market, too. We’re winning back transactional customers and we’re maintaining 45% of that under power-by-the-hour agreements. We’re making customer-centric decisions that we normally couldn’t do because the P&Ls were not necessarily aligned with the customers—from spare engines to used serviceable material. I’m very pleased with the progress. The piece we need to finish is the IT rewiring, which we’ll start this year.

 

How are you using engine data differently?

We are accumulating more and more data from the engines, and we’re going to provide for the first time the business intelligence that the industry requires. We’ve been scratching at this for years, and I think technology is converging to the point where it’s going to happen. Technology is coming from several dimensions: Engines are generating more data; the ability to store that data has increased exponentially; and the ability to process that data real-time has emerged.

We announced a collaboration with IBM last year that is accelerating our ability to monitor fleet care agreement engines and use that data for the enhancement of the engine operations. We built a model with IBM that can predict inflight shutdowns to 99% accuracy looking forward 12 months.

As the OEM, we will have all data and underlying intelligence capability to use that data for business intelligence. For instance, we can look at city-pairs for which an engine is operating and we can look at the influence of the city-pair on the engine maintenance. That’s important for three reasons: We can give that guidance back to the operator; we can bake it into the rate that we’re charging for service agreements; and we can optimize maintenance around that engine. It becomes a full circle—we can use this data to provide you the best rate and optimize engine performance. We call it Pratt & Whitney Intelligent Workscopes. Big data allows you to correlate the impact of data parameters. 

Matthew Bromberg

Matthew Bromberg became president for aftermarket at Pratt & Whitney in June 2013. He joined parent company United Technologies Corp. in 2002 and has held several positions including vice president-corporate strategy and development for UTC and vice president and general manager for customer service for subsidiary Hamilton Sundstrand. Before joining UTC, Bromberg was an investment banker for Goldman Sachs and a nuclear-training submarine officer in the U.S. Navy. 

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