This Expensive Aerospace Deal Is Leaking Fuel

United Technologies Corp. aims to close its purchase of avionics maker Rockwell Collins Inc. this month, pending approval from Chinese antitrust regulators. The $30 billion deal will bundle Rockwell’s information-management and navigation systems with UTC’s jet engines and landing gear. The idea is that the combined company will be better able to weather the cost cuts Boeing Co. and Airbus SE demand from their suppliers and win a bigger share of the work on next-generation jets. There’s logic to this, but it’s a defensive move and an expensive one at that: The price represents one of the richest multiples of profit ever paid in an aerospace deal.

UTC was already the biggest supplier of plane parts; it’s unlikely that getting even bigger will impress Boeing or Airbus. It’s instructive to look at what happened after the company bought aircraft parts maker Goodrich Corp. for $18 billion in 2012. Newly swelled in size, UTC balked at the price cuts Boeing demanded on landing gear for the 777X. Boeing called its bluff, handing the contract to a small Canadian manufacturer.