RTX, the new name for the former Raytheon Technologies, saw its stock price drop more than 15% Tuesday morning after the company disclosed a defect potentially affecting 1,200 engines produced by Pratt & Whitney ahead of its second-quarter earnings call.
RTX, the parent company of East Hartford-based aerospace manufacturer Pratt & Whitney, reported second quarter sales of $18.3 billion, up 12% from a year ago, in its earnings report Tuesday. The company’s adjusted earnings per share was $1.29, which was up 11% from a year earlier.
Pratt & Whitney saw its second quarter revenues increase 15% to $5.7 billion.
Despite the gains, the company’s stock price saw a sharp drop pre-market Tuesday after it announced up to 1,200 GTF engines will have to be removed from their respective fleets over the next nine to 12 months for early inspections. RTX said that Pratt & Whitney has found a rare condition in powdered metal used to manufacture certain engine parts that will require accelerated fleet inspection.
Company officials said they anticipate that a significant portion of the PW1100G-JM engine fleet, also called the GTF, which powers the A320neo, will require accelerated removals and inspections within the next nine to 12 months, including about 200 removals by mid-September.
RTX officials said this does not impact engines currently being produced, as the company altered its manufacturing processes related to this powdered metal years ago.
“We understand the issue and we have begun to address it through an inspection protocol that we already have in place,” RTX Chairman and CEO Greg Hayes said during Tuesday’s call.
Company officials said engines affected will undergo “enhanced” inspections. Many of the engines were already scheduled for routine inspections, but some are being moved up to address the issue.
The financial impact associated with the engine removals is still being analyzed by the company, officials said.
“It’s not an existential problem for RTX and it’s not an existential problem for Pratt. It’s a problem, we have them everyday, and we’re going to solve it,” Hayes said Tuesday.
