BRENDAN MCDERMID/Reuters
United Technologies Corp. on Tuesday raised its full-year sales and profit forecasts, aided by an increase in demand for its aircraft-maintenance parts and services as airlines grapple with overworked planes due to the grounding of Boeing’s Max jets.
Shares of UTC, which makes the Pratt & Whitney aircraft engines and is on track to spin off its Otis elevator and Carrier air conditioner units, rose as much as 2.7 per cent in morning trade.
UTC is among the first aero-parts supplier to signal gains from the Boeing groundings, which has otherwise rattled the aerospace sector as more than 300 737 Max passenger planes have been taken out of service, leaving several airlines to deal with thousands of flight cancellations and reschedules.
“There is impetus on the airlines and the [maintenance and repair] shops to ensure that the existing fleet is in a ready to fly state,” UTC chief financial officer Akhil Johri said, talking about the Max grounding.
“In that environment, the [repair] shops and the airlines are ensuring that they have the parts supply available and that is definitely helping [UTC].”
UTC said sales in its Collins aerospace unit, which makes engine components, landing gear, wheels and brakes, and interior and exterior aircraft lighting, surged about 66 per cent to US$6.58-billion in the second quarter.
The unit is UTC’s biggest and is also benefiting from the acquisition of aero-parts maker Rockwell Collins.
Mr. Johri added that growth in the unit will slow in the second half compared with the first, as stocking of spare parts by airlines and shops eases with the possibility of Max returning to the sky.
UTC said it expects its acquisition of Rockwell to add an extra US$150-million sales and 15 U.S. cents a share to its profit in 2019.
That helped the company raise its current-year adjusted earnings-per-share outlook to a range of US$7.90 to US$8.05, from US$7.80 to US$8.
UTC now expects full-year adjusted sales to rise between 4 per cent and 5 per cent, up from 3 per cent and 5 per cent forecast previously.
“The guide was tweaked up more than we had been expecting,” J.P. Morgan analyst Stephen Tusa wrote in a note.
UTC reported earnings per share of US$2.20 for the quarter ended June 30, beating the average analyst estimate of US$2.05, according to IBES data from Refinitiv.
The company’s net sales rose 17.5 per cent to US$19.63-billion, above Wall Street expectation of US$19.55-billion.