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UTX's Pratt & Whitney Wins $1.5B Contract from U.S. DOD

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United Technologies Corp.’s operating segment Pratt & Whitney recently secured a contract worth $1.5 billion from the U.S. Department of Defense to manufacture F135 propulsion systems to power all three variants of the F-35 Lightning II aircraft. The deal encompasses 99 engines in aggregate, along with program management, engineering support, spare modules and related spare parts.

Under the current contract, Pratt & Whitney has reduced the unit prices for 86 conventional takeoff and landing and carrier variant propulsion systems by 2.6%, while lowering the same for 13 short takeoff and vertical landing propulsion systems by 4.2%. With an extensive investment in R&D in collaboration with the U.S. Government, Pratt & Whitney has been able to trim the costs of conventional takeoff & landing and carrier variant propulsion systems by 50%, and that of short takeoff and vertical landing propulsion systems by nearly 35% since 2009. The collaboration is expected to yield approximately $7.5 billion in savings over the tenure of the F-35 program.

Over the years, Pratt & Whitney has been actively focusing on the production of the F135 engines that power the F-35 Lightning II fighter jets.  These highly advanced fighter jets manufactured by Lockheed Martin Corporation (LMT - Free Report) are widely regarded for their superior combination of stealth with speed and agility.

In order to maintain a steady production pipeline, Pratt & Whitney has established an effective supply chain across the globe. The company has further ramped up its supplier base to double both commercial and military engine production for the next five years by signing long-term agreements worth $22 billion with nearly 800 suppliers.

Pratt & Whitney is among the world’s leading suppliers of aircraft engines to the commercial, military, business jet and general aviation markets. Pratt & Whitney’s Global Services provide maintenance, repair and overhaul services, including the sale of spare parts and fleet management services for large commercial engines.

Based in Hartford, CT, the parent company United Technologies provides high-end technology products and services to the building systems and aerospace industries worldwide. The company serves various end markets such as aerospace, defense and commercial construction. The business diversification allows the company to remain profitable amid tough economic times.

United Technologies presently has a Zacks Rank #4 (Sell). A couple of better-ranked  stocks in the industry include Leucadia National Corporation and Honeywell International Inc. (HON - Free Report) , both carrying a Zacks Rank #2 (Buy).

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