Collins Aerospace faces new merger before previous one is fully integrated

July 16, 2019, © Leeham News: Ajay Agrawal, the president of Collins Aerospace’s aftermarket services, wasn’t done integrating the merger between United Technologies and Rockwell Collins.

He now faces a new integration with the planned merger between United Technologies (Collins’ parent) and Raytheon. The new company will be called Raytheon Technologies. There’s little he can do until the merger is approved by regulators, except plan internally how to integrate and expand the aftermarket business.

Raytheon represents an “exciting” opportunity, but until the merger is approved, the two companies are prohibited by law from coordinating planning and businesses.

“It’s primarily defense,” Agrawal said. “So far, we really haven’t worked on the aftermarket angle. It’s a little too early to discuss the possibilities.”

$1.5bn in new business

Collins announced $1.5bn in aftermarket services business at the Paris Air Show last month, assembled over a six month period.

“When we came together as Collins, our biggest priority was customers and being able to respond to the customers’ needs,” Agrawal said in an interview with LNA at the air show.

“Our offerings are working,” he said. Agrawal pointed to its predictive maintenance product has picked up steam.

“We continue to expand our predictive maintenance offering, connecting hardware and sensors and avionics buses. From there, you can run the analytics and from there bring predictive value,” he said. “We are maturing all of this connectivity very quickly.

“We are seeing very strong revenue opportunities. When we came together as two companies (Collins and UTC), we knew there would be cost synergies. The revenue synergy side of the equation has real opportunity. We are tracking more than 10 different areas, which will bring in over a billion dollars of revenue over the next five years,” he said.

Collins has made a strategic move into Africa. A partnership with Ethiopian Airlines is for 25 years for maintenance of parts on the Q400 turboprop for its own fleet and as a third party vendor for other African carriers.’ Africa represents $500m in potential revenue over the life of the contact, Agrawal said.

Aftermarket revenue is about $10bn a year.

 

 

 

 

15 Comments on “Collins Aerospace faces new merger before previous one is fully integrated

    • Weren’t these the guys that had the MCAS software written in India for $9/hour?

  1. The reason ‘UTC may be selling Collins Aerospace so quickly .. is that there may be problems within Collins, future lawsuits for the 737-MAX problems, etc. That may be one reason UTC is selling what they just bought. Honeywell used to make the flight computers for the 737. Collins may not have the experience and expertise to fix their new technology.

    • UTC is not selling Collins Aerospace. UTC is spinning off OTIS and Carrier Division. Collins Aerospace and Pratt and Whitney will merge with Raytheon. The link you provided and I guess you failed to read or comprehend was that the MCAS was designed by Boeing and build to Boeing’s specification. Read the second paragraph of the link you provided.

      “Boeing designed that software, known as the Maneuvering Characteristics Augmentation System (MCAS). But the lines of code underpinning this system and the physical box it runs on were programmed and built to Boeing’s specifications by a lesser-known company called Rockwell Collins, one of the hundreds of partners that Boeing relies on to assemble the 737 Max.”

      • Thanks for correcting hasty ill-informed people.

        Rockwell Collins avionics company programs and builds many key systems for aircraft, including the main displays of the 787 and the databus protocol or such for that airplane..

        Honeywell is a primary competitor, especially strong in flight controls such as autopilots, likely the 787 included, and primary sensors such as gyros and IRS. And FMS navigation devices systems for the larger airliners. (Sperry was assimilated into Honeywell years ago, as was Allied Signal which included Bendix and Sundstrand Data Control avionics including radios and wx radar, and GPWS terrain and windshear warning systems.

        Smiths of Michigan, now part of GE Aerospace who have gotten back into avionics, has long built FMS systems for smaller airliners, and I gather has built the card cabinet for the 787. (These days some functions are just on cards in a generic hosting box.)

        I don’t know what became of Litton who were big in inertial navigation systems decades ago, with the LTN-51 then LTN 72. And Delco were also, Carousel IV product IIRC.

        Some of the various companies were better known in the military avionics field.

    • UTC was looking to break apart the Aero/Defense half of the company from the Elevator/HVAC half of the company prior to the Collins purchase. Carrier/Otis become wholly owned subsidiaries of UTC

      and UTC isn’t “selling” Collins/P&W, they are (effectively) buying Raytheon and keeping the better known Raytheon brand name for the combined enterprise. CollinsP&WRaytheon will be 54% UTC owned subsidiary with Raytheon shareholders having 46% of the combined company. Raytheon’s current CEO will hold a ceremonial board position for 2 years then retire to his swimming pool full of gold coins. going forward the company will be run by UTC/Textron/P&W alumni with some Raytheon Buisiness unit execs kept around for continuity.

      • Thanks Bilbo, I follow that sector but that one had my head twisted, mind bent. Followed all side of UTC for years with various interaction with the Elevator and HVAC end. It seemed weirder and weirder mix as time went on.

        Is this a case of MD taking over Boeing under Boeing’s name or is UTC really the managing firm?

  2. UTC is not selling Collins Aerospace. In fact UTC is selling Carrier and Otis. Collins and Pratt and Whitney which will make up future UTC will be merging with Raytheon. Before UTC merges with Raytheon Carrier and Otis needs to be spun off.

    If you had read the link you provided (2nd paragraph) the MCAS was designed and build to Boeing spec. What you are saying is not true.

    Boeing designed that software, known as the Maneuvering Characteristics Augmentation System (MCAS). But the lines of code underpinning this system and the physical box it runs on were programmed and built to Boeing’s specifications by a lesser-known company called Rockwell Collins, one of the hundreds of partners that Boeing relies on to assemble the 737 Max.

  3. Phew, they went from the Peoria Hens to the Milwaukee Bucks!

    The mix makes sense as Ottis (Carrier?) did not.

    I think they supply the AC units for the 787 though.

  4. Actually, AlliedSignal bought Honeywell and took the Honeywell name for marketing purposes. But besides that, I wonder if all this is good for aerospace workers? Just a guess, short term: No it isn’t. But longer term if Boeing, Airbus and the United States’ space program all move ahead with new ideas, then maybe – Yes, it could be.

    • Collins Aerospace probably is going to have lots of similar products with other divisions of UTC. This would especially apply to the Sensors Division in Goodrich Aerospace, another huge company that also in the last few years was bought by United Tech.

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