RTX to take $3 billion charge on Pratt & Whitney engine problem
The issue is forcing inspections on hundreds of Pratt & Whitney GTF engines ahead of schedule.
Tekef
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 said Monday that an engine manufacturing flaw forcing accelerated inspections will hit its pretax results this quarter by $3 billion, sending shares down more than 6% in morning trading.
The problem stems from flaws with powder metal used to make some of the popular Pratt & Whitney GTF engines. That issue is forcing inspections on hundreds of engines ahead of schedule, depriving airlines of some aircraft during a travel rebound in the pandemic's wake.
RTX said that about 600 to 700 engines beyond the company's early forecast will have to be removed for shop visits through 2026.
The engines power many of the popular Airbus A320neo planes and others.
RTX, formerly known as Raytheon Technologies, reaffirmed its adjusted earnings estimates of $4.95 to $5.05 a share for 2023. But it said it expects a $1.5 billion hit to cash flow in 2025, bringing that estimate to $7.5 billion from an earlier estimate of $9 billion.
The company said it expects the issue to cost up to $7 billion. Pratt & Whitney has a 51% share in the GTF PW1000 engine program and the cost will be shared.
