Model of a Pratt & Whitney GTF engine is displayed on 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 in its Pratt & Whitney unit that’s forcing accelerated inspections will hit its pretax results this quarter by $3 billion, and that tons of of aircraft engines will must be removed for inspections through 2027.
Its shares dropped near 8% Monday to $76.90, the bottom in greater than two years.
The issue, which the corporate first disclosed in July, stems from defects with powder metal used to make a number of the popular Pratt & Whitney geared turbofan engines, a flaw that may cause cracks. RTX said that about 600 to 700 engines beyond the corporate’s early forecast can have to be removed for shop visits through 2026.
That issue is depriving airlines of some aircraft during a travel rebound within the Covid pandemic’s wake.
European budget carrier Wizz Air, which has planes powered by Pratt’s GTF engines, said in a press release Monday that the issue will force it to scale back capability by 10% within the second half of fiscal 2024.
Customers with the GTF-powered planes also include Spirit Airlines and JetBlue Airways. Those airlines didn’t immediately comment.
Removing engine components for inspections will result in backlogs in its repair facilities, RTX said. It forecasted that it’s going to take as much as 300 days from when the engines are faraway from wings until they return to airlines.
The corporate estimated an average of 350 Airbus A320 family planes per yr will probably be grounded from next yr through 2026.
The corporate said it expects the problem to cost as much as $7 billion. Pratt & Whitney has a 51% share within the GTF PW1000 engine program and the associated fee will probably be shared with its partners including Germany’s MTU.
The engines power a lot of the favored Airbus A320neo planes and others. The engines compete with those made by a three way partnership of General Electric and France’s Safran.
“To be clear, this latest disruption from the powdered metal contamination is frustrating, and can have a big impact on our customers, on our partners and on RTX,” CEO Greg Hayes said on a call with analysts in regards to the issue on Monday. “Still, we’re proactively managing this daily by dedicating all of the resources needed to be certain that we address this issue in the very best possible manner for our customers, our partners, the corporate and our shareowners.”
RTX, formerly referred to as Raytheon Technologies, on Monday reaffirmed its adjusted earnings estimates of $4.95 to $5.05 a share for 2023. But it surely said it expects a $1.5 billion hit to money flow in 2025, bringing that estimate to $7.5 billion from an earlier forecast of $9 billion.