Pan American World Airways said yesterday it will be the first buyer of Pratt & Whitney Aircraft's new turbofan jet engines, giving Pratt a breakthrough in its competition with General Electric Co.
Pan Am's decision to order Pratt's new PW4000 engines for its 12 Airbus Industries A310-300 wide-body jetliners is a "significant milestone" in the revival of Pratt's commercial engine business, said Arthur Wegner, president of Pratt.
The announcement marks the first order for the PW4000 engine, currently the focus of an intensive development effort by Pratt. The aircraft manufacturer said it can now move the project closer toward large-scale production.
The $144 million order for the Pratt engines ends the first round of a competitive battle between Pratt, a subsidiary of United Technologies Corp., and General Electric, which had also hoped to win the Pan Am order.
Pan Am also announced a $125 million order for engines built by a Pratt-led consortium, International Aero Engines. IAE will supply its V2500 engines for Pan Am's smaller Airbus A320 jet transports.
The engine orders together are worth $269 million, but the need for spare engines and options will make the agreement worth more than $500 million to Pratt, the company said.
The airline's decision represented a "double victory" for Pratt, which has a 30 percent interest in IAE, said a Pan Am spokesman. Rolls Royce of Great Britain also has a 30 percent interest, and three companies in West Germany, Japan and Italy own smaller shares.
Pan Am said the selection of the engines is subject to the negotiation of definitive contracts with each manufacturer.
Airline industry analysts were not surprised by Pan Am's selection, noting that Pratt has been a major supplier to Pan Am since the 1950s. Pratt & Whitney engines currently power Pan Am's entire fleet of Boeing 747, 747SP, 727 and 737 aircraft.
But Pan Am had surprised the industry by a departure from a long-time supplier in September when it announced a $1 billion order for the 28 Airbus twin-engine aircraft, despite Pan Am's long history as a major customer of the Boeing Co.
The Airbus jets are planned for delivery between 1987 and 1990, although Pan Am noted that the order is also subject to the execution of a definitive agreement.
General Electric had offered its CF6-80C2 engine for the large Airbus A310-300 jets. GE, in partnership with a French company, had proposed its CFM56-6 engine for the smaller A320s.
Analysts said Pan Am chose the Pratt engines because of a combination of factors, including the long-standing business relationship between the two companies, the price package offered and the technology.
The Pratt engines "obviously represent the very latest in technology, and Pratt probably made a very strong price proposal to gain the launching order," said Paul H. Nisbet, an analyst with Prudential-Bache Securities Inc. "But a single order is certainly not indicative of a trend at this point. . . . It is no great surprise that Pan Am didn't switch suppliers."
Pan Am said the Pratt engines were chosen because they fit the airline's plan for "high-performance and high-efficiency airliners."