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UPDATE 1-Airbus hopes M&A talk does not distract United Tech from operations
August 30, 2017 / 9:47 PM / a month ago

UPDATE 1-Airbus hopes M&A talk does not distract United Tech from operations

(Adds details about Boeing; adds NEW YORK dateline)

By Ingrid Melander and Alwyn Scott

PARIS/NEW YORK, Aug 30 (Reuters) - Airbus has urged supplier United Technologies Corp to stay focused on fixing industrial problems that have delayed new aircraft deliveries even if it presses ahead with plans to buy avionics and seats maker Rockwell Collins Inc.

The two U.S. aerospace suppliers have been discussing a tie-up for around a month and a person familiar with the matter said on Tuesday a deal could come as early as next week.

“We will only comment on the implications of such a deal when it becomes real,” an Airbus spokesman said. “Today, our total focus is on delivering planes and we hope that any potential M&A would not distract UTC from their top operational priority.”

Delays in receiving engines from United Technologies subsidiary Pratt & Whitney have disrupted deliveries of Airbus A320neo jets, drawing criticism from the European planemaker’s management.

United Technologies said in July that the problems will be fixed by year-end and that it still expects to deliver between 350 and 400 engines this year.

The unusual warning to United Technologies before any acquisition is completed is the first public sign that the possible deal to create a large, combined supplier may be ringing alarms at the world’s largest planemakers.

United Technologies and Rockwell Collins declined to comment on the remarks from the Airbus spokesman.

Boeing Co declined to comment on the potential impact of a merger between the two suppliers.

Boeing does not use Pratt engines, but its aircraft have major parts and systems made by United Technologies and Rockwell, such as avionics, seats and air conditioning.

In the past, Boeing has raised concerns about mergers among suppliers in cases where a combination could lead to higher prices or cause production problems.

In some cases, Boeing has used its power in reassigning supply contracts to new owners to oppose deals, but those were typically with much smaller suppliers than Rockwell or United Technologies.

Rockwell Collins shares fell after Boeing said in July that it had set up an avionics group to make aircraft controls and electronics, a move seen as potentially threatening to Rockwell Collins and United Technologies. (Reporting by Tim Hepher and Alwyn Scott; Editing by Ingrid Melander and Bill Rigby)

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