UTX United Technologies Corporation

By Doug Cameron and Thomas Gryta 

United Technologies Corp. is devoting $30 billion to buying Rockwell Collins Inc. as it seeks the missing link in a broader quest by the global aerospace sector: building the digitally connected aircraft.

Aerospace companies are investing heavily to connect everything from engines and brakes to even coffee pots equipped with sensors, allowing them to predict when they will break and ensure they are best placed to fix or replace them.

Maintenance and repairs have long been the most profitable part of the aircraft industry, prompting efforts by Airbus SE, Boeing Co. and others to secure a larger slice of the business, moves potentially threatened by United Technologies' move on Rockwell Collins.

"It gives us the opportunity to do things that we wouldn't be able to do on our own," said United Technologies CEO Greg Hayes on a Tuesday conference call. The combination with Rockwell Collins will make it easier to meet demand for digital offerings, he said, and integrate aircraft systems with benefits like reducing over all weight.

United Technologies is already the world's largest aerospace supplier, with almost $30 billion in sales this year split evenly between its Pratt & Whitney engine unit and UTC Aerospace Systems, which makes everything from landing gear to the motors that control wing flaps.

Rockwell Collins would add another $9 billion in annual sales derived from its business of cockpit controls and communication equipment and this year's purchase of B/E Aerospace, the biggest provider of aircraft seats.

Rockwell also makes the sensors and communication systems allowing the performance of those products to be tracked in real time by airlines and other users, allowing them to decide when maintenance and spares are required.

"Everything is going to become a smart device," Rockwell Collins' CEO Kelly Ortberg told investors last year.

Mr. Ortberg would become CEO of a new United Technologies unit, Collins Aerospace, with annual sales of $23 billion this year, a level of heft that some believe could make Airbus and Boeing uncomfortable.

"This may greatly concern aircraft OEMs such as Airbus and Boeing as they confront an ever increasing proportion of their supply chain controlled by a single supplier," said Stephen Perry, managing director at Janes Capital Partners, a boutique aerospace investment bank.

On Tuesday, Mr. Hayes was already working to ease such concerns. There wasn't any discussion of the potential deal with customers prior to the announcement, according to a person close to the deal, but Airbus had publicly expressed concerns that it would distract from UTC's core mission of providing engines.

Write to Doug Cameron at doug.cameron@wsj.com and Thomas Gryta at thomas.gryta@wsj.com

(END) Dow Jones Newswires

September 05, 2017 10:27 ET (14:27 GMT)

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