Alcoa Announces Jet Engine First in $1.1 Billion Supply Agreement with Pratt & Whitney

Alcoa Press Release:

July 14, 2014
Alcoa Announces Jet Engine First in $1.1 Billion Supply Agreement with Pratt & Whitney
Unveils World’s First Advanced Aluminum Alloy Fan Blade Forging for Pratt & Whitney’s Hybrid-Metallic Fan Blade for the PurePower^®Engines

NEW YORK & FARNBOROUGH, England--(BUSINESS WIRE)--Leading aerospace manufacturer Alcoa (NYSE:AA) today announced a 10-year, $1.1 billion agreement with Pratt & Whitney, a division of United Technologies Corp. (NYSE:UTX), for state-of-the-art jet engine components. Under the deal signed at the Farnborough Air Show, Alcoa will supply key parts for Pratt & Whitney’s engines, including the forging for the first ever aluminum fan blade for jet engines. The forging was developed for Pratt & Whitney’s PurePower^® engines using an advanced aluminum alloy and a proprietary manufacturing process. Also for the PurePower engines, Alcoa is developing a fan blade forging using its most advanced aluminum-lithium alloy.

“We’re going where no materials scientist has gone before,” said Alcoa Chairman and Chief Executive Officer, Klaus Kleinfeld. “Combining Alcoa’s proprietary alloys and unique manufacturing processes with Pratt & Whitney’s design, we cracked the code on forging an aluminum fan blade that is lighter and enables better fuel efficiency. Through this exciting new 10-year deal, Alcoa will deliver not only aluminum fan blade forgings but also a range of other advanced product forms, from blades and vanes to structural castings, for some of Pratt and Whitney’s best-selling engines.”

Under the $1.1 billion deal, Alcoa will supply components for Pratt & Whitney’s PurePower PW1000G, V2500, GP7000 and several other regional jet and military engines. The unique Geared Turbofan™ architecture of the PurePower engine allows for aluminum alloys to be used in the Pratt & Whitney designed fan blades, making the engine lighter, as well as more fuel and cost efficient. The PurePower engine will be used to power some of the world’s highest volume aircraft, including the next-generation Airbus A320neo. The transaction includes United Technologies Corporation “One Company” terms and conditions that provide for a common contracting approach between UTC and Alcoa divisions, thereby facilitating future collaboration.

“Through our novel engine design, and by working with industry leaders such as Alcoa, we are able to provide our customers with double-digit improvements in fuel efficiency, environmental emissions and noise. The PurePower engine’s hybrid metallic fan blade represents a significant advance in our engine design and allows us to meet engine performance requirements while reducing weight and cost,” said Paul Adams, president, Pratt & Whitney. “This agreement demonstrates the value of our proven next-generation engines. As we prepare to ramp-up production of these engines, we are actively seeking suppliers like Alcoa who can deliver high-quality parts, while meeting cost targets.”

Pratt & Whitney’s advanced gear system allows the fan to rotate at a slower speed and the hot section to operate at higher speeds, optimizing the running conditions of both. The large, light-weight fan moves more than 90 percent of the air around the core, delivering a very quiet engine with very low fuel burn. The larger fan diameter also opened the door to materials beyond titanium and composites.

“We worked in lock step with Pratt & Whitney during their development of the engine, providing technical solutions that previously did not exist,” said Eric Roegner, Chief Operating Officer, Alcoa Investment Castings, Forgings, and Extrusions. “This breakthrough harnessed the full capabilities of the Alcoa Advantage—the combination of our metallic science expertise at the Alcoa Technical Center and our manufacturing strength at our plants in Cleveland, Ohio and Lafayette, Indiana.”

Alcoa plans to use aluminum and aluminum-lithium from its Pittsburgh, Pennsylvania and Lafayette, Indiana facilities for the front fan blades, which will be produced using proprietary manufacturing processes at its Cleveland, Ohio plant. Several of Alcoa’s facilities including La Porte, Indiana; Whitehall, Michigan; Dover, New Jersey; and Wichita Falls, Texas will supply the blades, vanes and structural components, produced using nickel-based superalloys, titanium as well as aluminum.

This supply agreement supports Alcoa’s strategy of profitably growing its aerospace business, which had revenues totaling $4 billion in 2013. The Company holds leading market positions in aerospace forgings, extrusions, jet engine airfoils and fastening systems and is a leading supplier of structural castings made of titanium, aluminum and nickel-based superalloys, which are produced by its downstream business, Engineered Products and Solutions (EPS). The Company also holds leading market positions in aerospace sheet and plate produced by its midstream business, Global Rolled Products (GRP).

About the PurePower Engine

With 20 years of research and development, component rig testing on all major modules, extensive ground and flight testing of a full-scale demonstrator engine complete and extensive ground and flight testing of its first two engine series well underway, the PurePower PW1000G engine with Geared Turbofan technology delivers game-changing reductions in:

• Fuel burn
• Environmental emissions
• Engine noise
• Operating costs

In the PurePower PW1000G engine family, a state-of-the-art gear system separates the engine fan from the low pressure compressor and turbine, allowing each of the modules to operate at their optimum speeds. This enables both an increase in the diameter of the fan and the low pressure compressor and turbine to operate at a high speed. The increased efficiency also translates to fewer engine stages and parts for lower weight and reduced maintenance costs.

For more information on the Pratt & Whitney PurePower engine, visit:

www.purepowerengines.com.

Twitter: http://twitter.com/purepowerengine

Facebook: http://www.facebook.com/purepowerengine

YouTube: http://www.youtube.com/purepowerengine

Additional resources: Go to www.alcoa.com/farnborough for more information, photos and b-roll.

About Alcoa

A global leader in lightweight metals technology, engineering and manufacturing, Alcoa innovates multi-material solutions that advance our world. Our technologies enhance transportation, from automotive and commercial transport to air and space travel, and improve industrial and consumer electronics products. We enable smart buildings, sustainable food and beverage packaging, high-performance defense vehicles across air, land and sea, deeper oil and gas drilling and more efficient power generation. We pioneered the aluminum industry over 125 years ago, and today, our 60,000 people in 30 countries deliver value-add products made of titanium, nickel and aluminum, and produce best-in-class bauxite, alumina and primary aluminum products. For more information, visitwww.alcoa.com, follow @Alcoa on Twitter at www.twitter.com/Alcoaand follow us on Facebook at www.facebook.com/Alcoa.

About Pratt & Whitney

Pratt & Whitney is a world leader in the design, manufacture and service of aircraft engines, auxiliary and ground power units, and small turbojet propulsion products. United Technologies Corp., based in Hartford, Connecticut, provides high technology products and services to the building and aerospace industries. To learn more about UTC, visit its website at www.utc.com, or follow the company on Twitter: @UTC.

Forward-Looking Statements

This release contains statements that relate to future events and expectations and as such constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements include those containing such words as “anticipates,” “expects,” “plans,” “should,” “could,” “may,” “will,” or other words of similar meaning. All statements that reflect Alcoa’s expectations, assumptions or projections about the future other than statements of historical fact are forward-looking statements, including, without limitation, statements regarding the improvement in performance of jet engines achieved by Alcoa’s advanced aluminum alloys and proprietary manufacturing process; and statements regarding Alcoa’s strategy and objectives regarding growing its aerospace capabilities and business. Forward-looking statements are subject to a number of known and unknown risks and uncertainties and are not guarantees of future performance. Important factors that could cause actual results to differ materially from those expressed or implied in the forward-looking statements include: unfavorable changes in the markets served by Alcoa, including the aerospace and jet engines components markets; failure to successfully implement, or to realize expected benefits from, new technologies, processes, or equipment, or advanced alloys or innovative products, whether due to competitive developments, changes in the regulatory or global economic environment, trends and developments in the aerospace, metals engineering and manufacturing sectors, or other factors; the possibility that certain assumptions with respect to Alcoa’s process technologies or its ability to capture demand for next generation aircraft engine parts could prove to be inaccurate; and the other risk factors discussed in Alcoa’s Form 10-K for the year ended December 31, 2013 and other reports filed with the Securities and Exchange Commission. Alcoa disclaims any intention or obligation to update publicly any forward-looking statements, whether in response to new information, future events or otherwise, except as required by applicable law.