By Alwyn Scott
NEW YORK (Reuters) - Aircraft electronics supplier Rockwell Collins (NYSE:COL) said on Monday its acquisition of B/E Aerospace Inc will triple its sales of equipment in new-generation widebody jetliners such as the Boeing (NYSE:BA) 787 and Airbus A350.
"And it will nearly double our position in the narrowbodies," Chief Executive Officer Kelly Ortberg said on a conference call with analysts, referring to top-selling jets such as the Boeing 737 and Airbus A320.
The $6.4 billion deal announced on Sunday would position Cedar Rapids, Iowa-based Rockwell Collins to benefit from anticipated demand growth in the aftermarket, which involves spare parts and service. For example, as leases expire on numerous widebody aircraft, planes will need the interior upgrades that B/E Aerospace provides.
Aftermarket sales would help offset weakness in other parts of the combined company. Rockwell sees sales to business jet and regional jet makers falling 10 percent to 15 percent in fiscal year 2017.
Sales to business jet manufacturers will fall 15 percent to 20 percent in fiscal year 2017, Ortberg said. The decline will be greater than the anticipated drop in business jet sales because of aircraft already in the production pipeline, he said.
"There's pretty significant amount of inventory in the system," he said.
B/E Aerospace earned 40 percent of its 2015 revenue from aftermarket sales, and 23 percent from business jet sales.
Rockwell's acquisition - which is expected to be completed next spring - also underscores the rising competition for lucrative aftermarket sales, a business that Boeing and Airbus also are pursuing.