RTX To Take $3B Charge as It Recalls, Inspects More than 600 Pratt & Whitney Engines

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Key Takeaways

  • RTX warned it will take a $3 billion charge this quarter as it inspects passenger jet engines with a potential defect.
  • The Pratt & Whitney engines are used on the popular Airbus A320neo planes.
  • Shares of RTX sank to their lowest level in more than two years following the news.

RTX (RTX) shares tumbled close to 8% on Monday after the jet engine manufacturer said it would take a $3 billion charge this quarter because of a recall of jet engines made by its Pratt & Whitney unit.

Approximately 600 to 700 of the GTF engines, which are used on Airbus’s A320neo passenger jets, will be removed for shop inspections between this year and 2026, longer than Pratt & Whitney’s earlier timetable. A majority of the inspections will take place this year and next, according to the company formerly known as Raytheon Technologies.

RTX said the additional costs are related to a previously disclosed “rare condition in powder metal” used to make certain parts for the GTF engines,” which will require inspections sooner than previously thought.

CEO Greg Hayes said the company was “focused on the challenges” related to the powder metal problem, and recognizes that “this is an extremely difficult situation for our customers, and we are proactively taking steps to support and mitigate the operational impact to them.”

RTX also said that while the issue isn’t expected to affect sales and margins in 2025, free cash flow will be impacted by approximately $1.5 billion, resulting in a 2025 free cash flow of about $7.5 billion.

Shares of RTX fell 7.9% to their lowest level since March 2021 following the news.

YCharts


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