Model of a Pratt & Whitney GTF engine is displayed at the 54th International Paris Air Show at Le Bourget Airport near Paris, France, June 20, 2023.
Benoit Tessier | Reuters
RTX announced on Monday that it will face a $3 billion impact on its pretax results this quarter due to an engine manufacturing flaw, causing accelerated inspections. As a result, the company’s shares dropped by more than 6% during morning trading.
The issue stems from defects found in the powder metal used to produce some of the popular Pratt & Whitney GTF engines. These flaws require inspections to be conducted ahead of schedule, leading to a shortage of aircraft for airlines during the post-Covid travel rebound.
RTX stated that approximately 600 to 700 engines, beyond its initial forecast, will need to be removed for shop visits through 2026.
These engines are utilized in various aircraft, including the Airbus A320neo.
Despite the setback, RTX (formerly known as Raytheon Technologies) reconfirmed its adjusted earnings estimates for 2023, ranging from $4.95 to $5.05 per share. However, the company anticipates a $1.5 billion decline in cash flow for 2025, revising the estimate to $7.5 billion compared to the previous projection of $9 billion.
The expected cost of addressing this issue is projected to be around $7 billion. Pratt & Whitney, having a 51% share in the GTF PW1000 engine program, will share the cost with its partners, including Germany’s MTU.
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