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Airbus insourcing moves sets up competition with UTAS

United Technologies will lose a monopoly position supplying nacelles for the A320neo family powered by the Pratt & Whitey PW1100G as Airbus develops a competing option for airlines to be ready after 2024, UTC chief executive Gregory Hayes confirms.

The decision pits UTC in competition with their customer and represents the latest in a series of aircraft components that suppliers are losing to aircraft manufacturers as both Airbus and Boeing seek to “insource” more of the work.

Airbus first broached the idea a couple years ago of developing a competitive offering to the nacelle now supplied by United Technologies Aerospace Systems, Hayes told analysts on a 24 October third quarter earnings call with analysts.

Comprising the air inlet, fan cowls, thrust reverser, plug and exhaust, the nacelle is one of the major structural subsystems on an aircraft and — due to the geometries and operating temperatures involved — ranks among the most complex to manufacture.

After asking UTAS to providing pricing data on nacelles, Airbus decided to launch a competitive alternative, Hayes says. UTAS will continue offering the company’s nacelle design to operators, even though that puts the supplier in an awkward position, Hayes says.

UTAS owns a sole-source position as the nacelle supplier through 2024, Hayes says.

“We unfortunately will be competing with our customer,” he says.

But UTAS expects to remain competitive against Airbus. By 2024, Airbus plans to have delivered thousands of geared turbofan (GTF)-equipped A320neo family aircraft.

“Once they have the Pratt GTF and UTAS nacelle, the switching cost will be somewhat significant,” Hayes says.

The insourcing decision follows several moves by Airbus and Boeing that have sent ripples through the supply chain, driving efforts to lower costs and acquire businesses that are less exposed to direct competition with the airframers.

Indeed, UTC views the pending acquisition of Rockwell Collins as part of its strategy to offset the insourcing push by airframers, Hayes says. The most value for the next generation of aircraft will be created by avionics and connectivity within the aircraft, he says.

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