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Friday, January 8, 2016

P&WC Paying Off Canada, Quebec for Royalties

 
Pratt & Whitney Canada's products include the PW200-series engine, which powers the AW169 and other aircraft. Photo courtesy of P&WC
 
Pratt & Whitney Canada this month will start paying off Canada and its province of Quebec to end royalty payments on future engine sales, its parent company told investors this week. 
 
But the company is staying put in Longueuil, Quebec, “to perform certain assembly, test and manufacturing operations,” parent company United Technologies Corp. said Wednesday in a U.S. Securities and Exchange Commission filing. UTC also said P&WC has agreed to spend about $8 million a year on “innovation and research and development through initiatives with post-secondary institutions and key industry associations in Canada and Quebec” through 2030.
 
Those governments have invested about $1 billion in P&WC, which took a roughly $870 million charge against the 2015 fourth-quarter to cover repayment of the loans over four years. Those payments and the 14 years of innovation and R&D investments would cover the cost of the loans, said UTC.
 
P&WC manufactures turboshaft, turboprop and turbofan engines in Canada, including the PT-6 turboshaft family that powers many helicopters. P&WC is required to pay royalties on future engine sales to the national and provincial governments under the loans, which are not due until at least 2030. The four annual repayments, which will total about $965 million, will pay the loans off P&WC’s books in 2020.
 
 

 

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