Rockwell says Boeing 737 MAX deal "very material"
NEW YORK (Reuters) - Boeing Co (BA.N) said on Thursday it had locked down a firm basic design for its new 737 MAX jet, choosing suppliers for key components and moving the jet a step closer to production in 2015.
Boeing gave Honeywell International Inc (HON.N) and Rockwell Collins Inc (COL.N) valuable new contracts to provide systems for the plane.
Honeywell will supply an electronic air-bleed system, which controls cabin pressure de-icing, and Rockwell Collins will provide large-format panel displays for the flight deck.
"It's very material to us," said Kent Statler, executive vice president and chief operating officer of commercial systems for Rockwell Collins. "We see it stretched over 4,500 aircraft. It is a sizeable opportunity."
The size of the market for single-aisle jets such as the 787 and the rival Airbus's EAD.PA A320 is expected to continue to grow, and Boeing said this likely would drive up production rates for its planes.
Boeing, based in Chicago, said its "firm concept" calls for the 737 MAX to use 13 percent less fuel than current 737s. The plane will include new LEAP-1B engines from CFM International, which combines resources from Snecma, a unit of the Safran Group of France, and General Electric Co (GE.N).
Rockwell's deal takes the display contract away from Honeywell, which supplies six smaller, six-by-eight-inch screens standard on the current 737, said Rockwell Collins' Statler.
Four of the new, 15.1-inch colour displays will be standard on the 737 MAX, a similar size and configuration to ones that Rockwell Collins supplies for Boeing's 787 Dreamliner.
The 15.1-inch Rockwell display is also used on Boeing's KC-46 aerial refuelling tanker for the U.S. Air Force, and available on the 747-8 and as a retrofit on 757 and 767 models, Statler said.
"This is a continuation of a strategy and relationship that has been building over the last decade" between Boeing and Rockwell, Statler said.
The configuration will offer a significantly larger area to display data to pilots, and will handle more advanced air traffic control and awareness technology as it comes into use, Statler said.
Airbus uses smaller-format screens on its A320 jets, and plans larger displays, supplied by Thales SA (TCFP.PA), on the A350.
Boeing said the 737 MAX remains on track for first delivery in 2017.
Boeing is currently producing 35 737 jets a month. The company said it likely would increase the production rate beyond its current forecast that calls for 38 a month in the second quarter of 2013, and 42 a month, starting in the second quarter of 2014.
The company is currently building a third production line at its factory in Renton, Washington, to accommodate the 737 MAX, which will enter production in 2015.
"Eventually, we'll use the third line for future rate increases," Beverly Wyse, vice president and general manager of the 737 program, said on a conference call with reporters.
She said Boeing officials "expect to see significant growth" in orders for single-aisle planes. "We don't have any specific plans when that next rate increase will be, but we're pretty sure it's coming."
Boeing shares rose 0.5 percent to $71.63 (45.18 pounds) in afternoon trade. Rockwell Collins was up 1.7 percent at $54.61.
(Reporting by Alwyn Scott; Editing by Theodore d'Afflisio and Jeffrey Benkoe)
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