RTX Corp (formerly Raytheon) has announced that it will need up to 60 days to inspect and fix each Pratt & Whitney GTF engine used on Airbus jets. The reason for this prolonged inspection and repair period is a new problem involving contaminated powder metal. This issue affects at least 1,200 GTF engines that power Airbus A320neo jets, which will now require “accelerated removals and inspections”.
In light of the metal powder problem, the affected engines will not undergo the usual four to five-month overhaul cycle. Instead, they will be brought in for a shorter period to allow technicians to disassemble, inspect, and potentially replace the affected parts. This unexpected development has caused concern among investors, causing RTX shares to initially drop 14% in morning trade. Although the shares have since recovered slightly to a 10.7% decrease, CEO Greg Hayes remains confident that the share price will recover, emphasizing that this issue is not a major financial problem for RTX.
Pratt & Whitney’s GTF engine competes against CFM International’s LEAP engine on the A320neo aircraft. While Pratt & Whitney has retained about a 45% market share since 2017, the GTF engine has been plagued by durability problems, which have resulted in grounded aircraft due to a lack of spare engines and parts. In June, another setback occurred when a supplier mistakenly installed the wrong part on some GTF engines, resulting in a $500 million hit to RTX’s free cash flow.
Despite these ongoing issues, customers have generally shown understanding. However, their patience is not infinite. It is unlikely that customers will switch to the LEAP engine in the short term due to a lack of capacity. Currently, approximately 36% of the 6,700 A320neo family aircraft on backlog do not have an engine provider chosen yet. With the durability and quality issues with the GTF engines still unresolved, many operators are waiting to see how these problems are ultimately addressed before making a decision.
In conclusion, RTX Corp’s inspection and repair process for the Pratt & Whitney GTF engines used on Airbus jets will now take up to 60 days due to a contamination issue with the metal powder. While the company believes this is not a significant financial problem, there have been concerns among investors, with RTX shares experiencing a temporary drop. With the competition from CFM International’s LEAP engine and ongoing durability problems, customers are closely monitoring how Pratt & Whitney addresses these issues before making any engine provider decisions.
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