PARIS (Reuters) - Three years after its founding merger, UTC Aerospace Systems (UTAS) is ready to turn its attention to acquisitions and is assessing potential targets, its president said on Sunday.
Until now, the aircraft components unit of United Technologies (UTX.N) has been focusing on integrating Goodrich, acquired by parent UTC for more than $16 billion in 2012 and combined with Hamilton Sundstrand to form UTAS.
“I think that process has been successful and it now enables us to look at what’s next,” UTAS President David Gitlin told Reuters.
“After we got through year two and things were going so well, it enabled us to start looking outward again and we are doing that.”
United Technologies Chief Executive Officer Greg Hayes has said it would spend at least $1 billion on acquisitions this year and set out a number of financial criteria.
“Our focus is on adding to the core, and usually we tend to err on the side of bigger deals rather than smaller ones,” Gitlin said.
Asked what size of deals might interest UTAS, he said, “It can vary. We don’t want to do a bunch of $10-20 million acquisitions, but we want to look at something that can move the needle. The size is a little bit less significant than the type of company and products they have.”
Asked whether UTAS was already talking to potential partners, he said, “We are always assessing.” He added he could not estimate the timeframe for any deals.
UTAS makes an array of components and systems for civil and military aircraft that include landing gear, nacelles that enclose engines and electrical power systems.
At $14.2 billion, the unit amounted to nearly 22 percent of revenue last year at UTC. It expects to be a $20 billion company in revenues by 2020, Gitlin said.
He was speaking in an interview ahead of the Paris Airshow.
Gitlin said the supply chain was “going in right direction,” due in part to investments in keeping it robust.
“If you look at key metrics .... it is far better today than it was a year ago.”
Planemakers Airbus (AIR.PA) and Boeing (BA.N) are raising production of their most popular single-aisle jets from 42 a month each to 50-52 a month by 2017-18. Both are exploring further increases toward at least 60 jets by the end of the decade.
Gitlin said UTAS had everything in place to meet the confirmed increase to 50-52 medium-haul planes a month from both manufacturers.
“We have a strong line of sight to go from 42 to 50 (single-aisle aircraft per month), and for us to go from 50 to north of 60 would require additional investment,” he said.
“We know that many of our suppliers would have to make a significant additional investment and we are in discussions with them now.”
Additional reporting by Lewis Krauskopf; Editing by Jonathan Oatis