The Board of Directors for United Technologies Corp. (UTX) authorized a share buy-back program for up to 60 million shares of the company, worth approximately $4.3 billion at current prices.

The new authorization supersedes a previous program, approved in Jun 2008, which is nearing completion. The company repurchased $1.1 billion of its shares during 2009 and expects 2010 repurchases to total $1.5 billion.

Update on Pratt Engine for F-35 Fighter

Meanwhile, the cost escalation on the main engine for the Lockheed Martin Corp (LMT) F-35 fighter jet has grown by $600 million over the past year, despite aggressive cost-cutting measures initiated by engine maker Pratt & Whitney, a unit of UTX, according to a Navy document.

The total cost to complete the Pratt F135 engine is now estimated to be $7.28 billion which is $2.5 billion greater than the $4.8 billion initially calculated for the engine, according to the source document. This is an increase of $600 million from the $1.9 billion cost overrun that was reported in 2009 by the House Armed Services Committee.

Pentagon is renewing its efforts to nullify an alternate engine program for the F-35 fighter which was initiated by Congress to counter problems associated with a single engine provider. Lawmakers defied a presidential veto to fund the second engine built by General Electric Co (GE) and Rolls Royce in 2009 and are ready to fight the Pentagon and White House to continue the program again in 2010.

Pratt & Whitney is among the world’s leading suppliers of aircraft engines for the commercial, military, business jet and general aviation markets. Pratt & Whitney’s Global Services provides maintenance, repair and overhaul services, including the sale of spare parts, as well as fleet management services for large commercial engines.

In terms of engine development programs, Pratt & Whitney is under contract with the U.S. Air Force to develop the F135 engine, a derivative of Pratt & Whitney’s F119 engine, to power the single-engine F-35 Lightning II aircraft being developed by Lockheed Martin.

United Technologies was incorporated in Delaware in 1934. UTX provides high technology products and services to the building systems and aerospace industries worldwide. We currently have a Neutral recommendation on UTX.

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