Flying High
Hanwha Techwin signed a 4.5 trillion won (US$3.84 billion) contract with the U.S.-based Pratt & Whitney (P&W) to supply airplane engine parts.
The company said that it has entered into a risk and revenue sharing program (RSP) agreement with P&W, one of the world’s top three airplane engine manufacturers, at the headquarters in Janggyo-dong, Seoul, on Dec. 21 for the international joint development of airplane engines, securing the engine parts supply rights, which are estimated at US$3.8 billion (4.5 trillion won) from 2015 to 2061.
The RSP is a contract method that allocates risks and profits according to shares in participation from airplane engine business development and mass production to aftermarket.
The project is for mid-size jet engine called “geared turbo fan” (GTF) of P&W’s small aircraft, including regional jets with less than 130 seats and mid-size single-aisle aircraft with 130 to 240 seats. The mid-size jet engine is in the greatest demand in the global market, using in Airbus' A320 Neo or Bombardier's CSeries in Canada.
Also, the company will supply three models of high-value added integrally bladed rotors (IBRs) to P&W for the first time.
The RSP is an area with high entry barriers that only a few companies with technological capabilities proven in the global airplane engine market can take part in. With the latest RSP participation, Hanwha Techwin has upgraded its status to an international joint development partner from a general parts supplier who needs to renew contracts every three to five years.
Previously, the company signed parts supply contracts worth US$900 million (1.05 trillion won) with P&W in November last year, US$430 million (503.53 billon won) with GE in January this year, and US$1.7 billion (1.99 trillion won) with P&W in June this year through the RSP methods. A spokesperson from Hanwha Techwin said, “In the past year, the company has secured aircraft engine parts supply rights worth US$7 billion (8.2 trillion won) in total, building up a stronger presence as an engine parts manufacturer in the global market.”