Pratt & Whitney posted a 25% boost in aftermarket revenues last quarter to finish 2017 up about 10% and is expecting a similar performance in 2018 on the strength of International Aero Engines V2500 overhal demand, executives of parent company United Technologies Corp. (UTC) report.
"Commercial aftermarket should grow around 10%" this year, "primarily driven by higher V2500 shop visits," Akhil Johri, UTC CFO, told analysts on a Jan. 24 earnings call. "First overhauls are coming in for a lot of those engines. We expect worldwide shop visits to be around 10% growth in 2018. And that's what drives a lot of that commercial aftermarket assumption."
Total V2500 shop visits approached 1,000 in 2017 and are expected to keep climbing through the early 2020s.
With about 60% of the engines under long-term agreements, Pratt reaps large benefits from the major of overhauls, even when customers use network partners such as MTU to handle the contracted work.
The V2500 ramp-up timeline provides a near-perfect bridge to Pratt's next major aftermarket wave—the PW1000G Geared Turbofan (GTF).
"Realistically, you're talking 2020, 2021 when we really start to see the aftermarket from the GTF start to be a meaningful part of the Pratt story," said UTC President Greg Hayes. "These engines will be out there for 20 or 25 years."
Pratt's 2017 aftermarket boost included a 10% jump in parts and a 2% lift in repairs, the company said.