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ANALYSIS: Collins Aerospace eyes bright future post merger

It has been 14 months in the making thanks to a tortuous regulatory approvals process, but United Technologies Aerospace Systems (UTAS) and Rockwell Collins have finally completed their $30 billion merger.

Now branded as Collins Aerospace, the division is one of two – Pratt & Whitney being the other – within a reshaped United Technologies, the parent company having announced a spin-off of its climate control and elevators businesses as the deal closed.

Collins Aerospace is led by Kelly Ortberg, the former chief executive of Rockwell Collins, with ex-UTAS boss Dave Gitlin as president and chief operating officer.

Speaking to FlightGlobal on 27 November – "day one" for the new business – Ortberg described the moment as a "monumental day for the industry".

There's a degree of management hyperbole in that statement, but the merger does create an aerospace juggernaut: based on 2017 figures, combined revenues were $21 billion and the group has 70,000 employees globally across 300 sites. It has six business units – aerostructures, avionics, interiors, mechanical systems, mission systems, and power and controls – which offer a nose-to-tail basket of aerospace products.

Crucially, the business has a presence on virtually every current and next-generation commercial and military platform and a number one or two position in a variety of segments.

Despite the lengthy approval process, Ortberg was never worried that the competition authorities would prevent the merger.

"I never really thought that it wouldn't happen – but you never know when," he says, attributing the slow pace to the pair's "large, complicated portfolio".

Although certain divestments were required by competition regulators, the loss of the operations carved out as part of that process does not fundamentally alter the rationale for the merger in the first place.

"I would say that the beauty [of the merger] is that we are combining from a position of strength," says Gitlin.

"Looking at both our portfolios, I feel very positive about the union we are planning."

Certainly, the breadth of programme penetration is impressive: Ortberg reels off a list of new or in-development commercial aircraft on which the combined business has a significant presence – the Airbus A220 and A320neo, Boeing's 737 Max and 777X, the Embraer E-Jet E2 series and so on – then repeats the process for the military, rotary-wing and business jet segments too.

"It is really a broad portfolio offering for everything that flies," he says.

That presence will be crucial for Collins Aerospace to leverage as it marries the aircraft "infrastructure" that both businesses already provide with the air-to-ground and ground networks from the Rockwell Collins side of the operation.

Much has been made of the potential cost and efficiency benefits aviation can take from the digital revolution, whether that is termed the internet of things, or the connected or smart aircraft.

But for Ortberg, what that means is simple: it is about "getting the right information at the right time to the right person so they can make the right decision".

"We are in a unique position to deliver that," he says. "Our challenge is to move that information off the platform on a real-time basis so that it can be leveraged."

Whether the end output is the holy grail of predictive maintenance across the whole aircraft or addressing a component-level issue, Gitlin believes the new business is ideally, if not uniquely, placed to provide the tools for airlines or OEMs to achieve those goals.

"Everybody is looking to optimise these very expensive assets and be more efficient," says Ortberg. "We are earning our way into the market by delivering this capability at a lower cost than it is currently being done."

Although both repeatedly refer to solutions and systems as key future offerings, both are equally at pains to stress that continuing to provide the hardware in the first place is vital.

With digital "a trend that's here to stay", as Gitlin puts it, Collins Aerospace "is designing the base hardware to take advantage of that – we are designing for digital". That means having the right sensors and algorithms at component level to dovetail with future prognostic and analytical software.

Boeing and other OEMs have made no secret of their desire to capture a bigger slice of the aftermarket – as well as driving down supplier rates. As a result, many view the merger of UTAS and Rockwell Collins as a means of combating that move – or, in Ortberg's words, "bulking up to compete".

A bigger company will be harder to push around, of course, but Ortberg denies that was ever the reason for the merger: "Our focus is on combining these entities to deliver more value to our customers," he says.

"We have to figure out how to structure ourselves to deliver best value going forward."

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