February 12, 2018 / 4:47 PM / a year ago

Pratt details engine glitch affecting Airbus jet deliveries

(Reuters) - Pratt & Whitney said on Monday it expects to present a fix to European regulators this week for a problem with its new geared turbofan jet engine that halted deliveries of Airbus’ (AIR.PA) latest version of its most popular aircraft model.

The logo of Dow Jones Industrial Average stock market index listed company United Technologies and their subsidiary Pratt & Whitney is pictured in San Diego, California April 21, 2016. REUTERS/Mike Blake

Pratt, a unit of United Technologies Corp (UTX.N), has suffered a series of problems with the new engine, but had said in January that the problems were largely behind it.

Europe’s air safety regulator on Friday issued an emergency warning about “inflight shutdown” of the engines. On Monday, Pratt said the issue affects 43 engines on 32 A320neos. Pratt said it was evaluating another 55 engines delivered to Airbus that are part of the group thought to have the problem.

Airbus said last week there were currently 113 Pratt-powered A320neo aircraft flying with 18 customers. The European plane maker said it had delivered one Pratt-powered plane this year, to a Chinese customer in February.

Airbus data show it faced a dearth of Pratt & Whitney deliveries in January, when it delivered six A320neo-family aircraft, all powered by Pratt’s competitor CFM International, a joint venture of General Electric Co (GE.N) and Safran of France (SAF.PA). Pratt said the latest problems were discovered in January and early February, and stem from an engineering change the company made last summer to the “knife-edge seal” in the high-pressure compressor near the rear of the engine.

Airbus shares fell on Monday, but United Technology shares were up 1 percent to 126.35 in morning trading on the New York Stock Exchange, after falling 3 percent last week when news of the issue emerged.

While acknowledging Pratt’s problems, some analysts downplayed the risk for investors. Several analysts recently upped their price targets for the stock.

Pratt has delivered about 550 engines so far and said in January it aims to double output this year. “It seems reasonable to conclude that only 30 to 40 engines or 15 to 20 aircraft are affected at this point, which is a small number,” analyst Carter Copeland and Melius Research wrote in a note published Monday.

Declines in United Technologies’ share price are a reason to buy the stock, he added, “but we don’t feel a sense of urgency given the program’s history of struggles.”

In a statement, Pratt said it would discuss the potential affect on 2018 engine production after regulators respond to its proposal to fix the problem.

Additional reporting by Tim Hepher; Editing by Tom Brown

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