Aerospace titan RTX, previously known as Raytheon Technologies, saw its shares drop 13% on Tuesday following an announcement about a manufacturing defect in some of its renowned Pratt & Whitney PW1100G engines, necessitating expedited inspections on approximately 200 units.
The defect arises from powdered metal used in the manufacture of specific engine components, the company disclosed during a quarterly earnings call. RTX, the parent company of airplane engine manufacturer Pratt & Whitney, clarified that the engines presently in production are not affected by this issue.
RTX adjusted its cash flow projection for the year, cutting it by $500 million to $4.3 billion as a result of this manufacturing problem. “It’s going to be expensive,” admitted RTX CEO Greg Hayes during the earnings call. “We’re going to make the airlines whole as a result of the disruption we’re going to cause them.”
The Implications for Airlines and Popular Aircraft Models
This issue adds to the challenges faced by airlines already dealing with late aircraft from manufacturers. The problem will particularly affect the Airbus A320neo, a narrow-body aircraft, and one of the most sought-after planes in the world. Pratt & Whitney has anticipated that nearly 1,000 more engines will require removal from airline fleets for inspections over the next nine to twelve months.
Conversely, shares of General Electric, a competitor engine maker, climbed over 6% on Tuesday. This rise came after the conglomerate uplifted its revenue and cash flow projections for the year, partially due to strong demand for jet engines.
More Engines to Face “Accelerated Removals and Inspections”
RTX disclosed that an additional 1,200 of its Pratt & Whitney GTF engines produced between 2015 and 2021 would undergo inspections over the next nine to twelve months. This measure is a response to a “rare condition” in the powdered metal used to fabricate certain engine parts, which requires “accelerated fleet inspection.”
The Federal Aviation Administration stated that it is aware of the issue and is in contact with Pratt & Whitney and airlines affected by the problem. Meanwhile, Delta Air Lines, a major Airbus client, said it is investigating the matter. A JetBlue Airways spokesperson revealed that the carrier is working with Pratt & Whitney to assess the impact on their fleet.
In Latin America, Volaris, a significant operator of the A320neo, has indicated that it is too early to ascertain the potential impact of the recent revisions. As of now, JetSMART, another key player in the region, has yet to release a statement on the issue.
