United Technologies has reached a definitive agreement to acquire Rockwell Collins to create “a premier aerospace systems supplier” in a deal worth USD$30b. The agreement values Rockwell Collins at $23b, with UTC also assuming Rockwell’s $7b debt. “This acquisition adds tremendous capabilities to our aerospace businesses and strengthens our complementary offerings of technologically advanced aerospace systems,” UTC CE Greg Hayes said. “United Technologies owns Pratt & Whitney which makes jet engines, including the delayed geared turbofan for the Airbus A320neo family of aircraft. Rockwell Collins is a supplier of avionics, and through its takeover of B/E Aerospace, also manufactures aircraft seats and cabin interiors. <br/>
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Boeing and Airbus voiced concerns about a proposed tie-up of 2 leading suppliers Tuesday, potentially upsetting United Technologies Corp.’s US$23b acquisition of Rockwell Collins. The world’s largest planemakers added to the chorus of sceptics of a deal that would create an aerospace behemoth with a range of products to outfit jetliners and warplanes. Investors sent United Technologies shares plunging by the most in 2 years, while credit ratings companies said the manufacturer risks downgrades. Boeing, which has been squeezing suppliers for discounts, warned it would take action to protect itself if it saw the merger as harming its business. “Until we receive more details, we are sceptical that it would be in the best interest of -- or add value to -- our customers and industry,” Boeing said. <br/>
US airline investors, already absorbing the worst monthly stock performance in a year, are bracing for more disappointment. A Standard & Poor’s index of the 5 biggest US airlines plunged about 7.5% in August, wiping out about US$10b in market value. Shares fell as a price war that started between United Continental and heavy discounters spread to more carriers and markets. Analysts see more pain ahead. Three carriers, led by Delta Air Lines Tuesday cut Q3 guidance for revenue from each seat flown a mile. UBS Group AG predicts the latest skirmish will force others to do the same. The trend is worrisome because the major airlines have been boasting that industry consolidation would lead to steadier profits and smoother shareholder returns, not repeated fare battles with low-cost rivals. <br/>
Another hurricane threat has emerged for airlines this week with Irma threatening to snarl US flight schedules. That comes just as the industry was trying to get back on track in Texas following Hurricane Harvey. For Irma, airlines had already begun waiving change fees to several Caribbean destinations with the storm – just upgraded to a category 5 hurricane Tuesday morning – taking aim at the region. Several airlines added certain Florida airports to their waivers by Tuesday afternoon, and the coverage areas for the rebooking policies could keep expanding as Irma tracked toward the US mainland. Flights to and from many Caribbean islands were already cancelled, or were going to be. For Wednesday, about 85 flights – or more than 40% of the day’s schedule – had been grounded at San Juan’s airport in Puerto Rico. <br/>
The UK has lifted its ban on in-cabin carriage of large personal electronic devices from Cairo International to the UK. The UK followed the US in imposing a ban on large PEDs following intelligence that suggested terrorist organisations were attempting to smuggle an explosive device onto an aircraft inside devices such as laptop computers. The UK imposed the restriction on 6 Middle East nations—Egypt, Jordan, Lebanon, Saudi Arabia, Tunisia and Turkey—in March 2017. Unlike the US, it did not impose restrictions on Qatar and the UAE. EgyptAir said the ban had been lifted on its flights from Cairo to the UK Sept. 1. “The decision has been agreed on after UK transportation authorities … approved the safety and security measures applied to EgyptAir flights to London and made sure it is safe and proportionate to do so.” The ban on US-bound flights from Egypt was lifted in July. <br/>