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GE Collaborates with Textron for Turboprop Engine & Aircraft

GE Aviation, an operating unit of diversified conglomerate General Electric CompanyGE , recently collaborated with aircraft manufacturer Textron Inc. TXT to come up with a new state-of-the-art turboprop aircraft and engine for the general aviation market. The strategic move is expected to help GE Aviation generate about $1 billion in annual sales of engines by around 2020.

While GE Aviation will pool in its expertise and resources in the partnership to develop an advanced turboprop engine, Textron will add to its repertoire by manufacturing an all-new single-engine aircraft with seating capacity of up to 12 passengers. The joint venture is aimed to provide a fair bit of competition to Pratt & Whitney's PT6 - a widely used engine produced from the wing of its parent United Technologies Corporation UTX . PT6 is arguably the industry leader in this segment, having dominated the small turboprop market for 50 years with over 51,000 units.

The new engine will leverage GE Aviation's superior technology that is in vogue in large jetliner and military engines and modify it to suit the needs of single and twin-engine general aviation aircraft and helicopters. The engine is expected to consume 20% less fuel than PT6, generating 10% more thrust at a cruising altitude due to a seamless integration of computer control of both the propeller and engine. In addition, the 1,650 horsepower engine is likely to reach a speed of 280 knots.

GE Aviation is a leading supplier of commercial and military jet engines and components. It also provides avionics, electric power, and mechanical systems for aircraft along with an extensive global service network to support these products.

General Electric has been manufacturing new age jet engines that are in high demand among aircraft manufacturers, namely the GEnx, GE90-115B engines and Leap-X. Aviation is one of the long-cycle businesses of this Zacks Rank #3 (Hold) stock, which typically has long processing and execution time. After a weak 2009 and 2010, the aviation business of the company has been reviving over the past few quarters due to the rebound in commercial air traffic.

A survey by diversified conglomerate Honeywell International Inc. HON further reveals that operators intend to purchase new jets to the tune of about 28% of their existing fleets over the next five years, either as a replacement or as a capacity extension. This offers huge growth potential for the strategic collaboration in the future.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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