General Electric Co. plans to turn a tiny airplane-engine company in the Czech Republic into a competitor against archrival Pratt & Whitney, the leading maker of turboprop engines for commuter airlines, corporate aviation and private aircraft owners. GE's aviation unit this week completed the acquisition of Walter Engines, which has earned a reputation during its 85-year history for building rugged propeller engines used heavily in Eastern Europe and niche markets such as agricultural and cargo planes. Although the small-engine business will fill an important hole at the low end of GE's jet engine product line, GE officials are also relishing the prospect of forcing Pratt & Whitney to cut prices on one of its most lucrative products. Pratt made a similar move two years ago when it began making spare parts for one of GE's best-selling jet engines, ratcheting up the companies' longstanding rivalry. Because of its large market share - roughly 15,000 of the 20,000 turboprop engines in the general aviation market are made by Pratt - the company has been able to command a premium, particularly for spare parts and service. Pratt & Whitney, a unit of United Technologies Corp., doesn't release specific numbers for its small-engine division, but it accounted for just under a third of the unit's $12.1 billion in revenue last year. “We think the world deserves a choice,” said Chet Fuller, general manager of marketing for GE Aviation. He said GE plans to invest heavily in Walter to make its turboprop engine competitive with Pratt & Whitney's PT6, which is the dominant supplier of such engines globally. GE will officially launch a revamped version of the Walter engine in late July. “Our plan is to take the advanced metals and designs that we use in our larger jet engines and adapt them into this already rugged little engine,” he said. A spokeswoman for Pratt, which delivered almost 3,000 small airplane engines last year, said the company will “obviously take any competition seriously,” but she noted that Pratt “has a 45-year head start,” having produced more than 35,000 PT6 engines. By comparison, Walter has produced roughly 37,000 engines since 1923, but only about 1,600 of them are its latest turboprop version. Walter is expected to produce 120 engines this year, but GE hopes to expand production rapidly, ramping up to 500 engines a year by 2010 and 1,000 engines by 2012. Walter's sales last year totaled about $28 million. Although the prospect of taking on Pratt is daunting, GE officials say they don't have to be No. 1 to consider the investment a success. They paid under $70 million for Walter in what amounted to a real-estate transaction involving the engine company's prime location in central Prague. The previous owners want to develop the site into something more upscale. For that amount, GE ended up with a casting plant, a spare-parts and components business and an already certified engine. On its own, a new turboprop engine would cost roughly $350 million to develop.
