Airplane parts makers consider mega-merger

AP Photo/Ryan J. Foley

United Technologies Corp. has approached rival aerospace supplies company Rockwell Collins about a merger, according to The Wall Street Journal. Rockwell Collins currently has a market cap north of $20 billion, and a merger would result in a UTC aerospace business that generates around $40 billion in annual revenue.

Why it matters: This could set up a major battle between plane manufacturers and parts suppliers, the former of which have been eating into the latter's business by trying to offer end-to-end maintenance. By merging, UTC and Rockwell Collins would have more leverage in such negotiations with carriers and other plane owners (including the U.S. military), particularly given that the two companies don't have much product overlap.