Oct. 24—As Pratt & Whitney gears up inspections of problem engines it sold to airlines, parent company RTX took a $5.4 billion hit against sales for the third quarter, a short-term decline as the East Hartford-based Pratt & Whitney scrambles to help airlines check their engines.
RTX reported a $984 million loss for the third quarter, down from a profit of nearly $1.4 billion a year earlier. Revenue plummeted 21 percent to $13.5 billion, though RTX calculated revenue at $19 billion if subtracting out the one-time decline incurred by Pratt & Whitney.
In addition to Pratt & Whitney, RTX also owns Collins Aerospace which is a major employer in the Hartford area, and various military defense systems manufacturing under its Raytheon division. As of mid-September, RTX reported having about 17,000 employees in Connecticut.
RTX established a new headquarters office this year in McLean, Va., having previously been based in Waltham, Mass. On Tuesday, RTX announced the planned sale of Raytheon's cyber security and intelligence business for $1.3 billion in cash, on the heels of selling to Safran last summer a Collins Aerospace unit in Europe that makes systems to control aircraft flight and engine thrust.
The company also revealed on Tuesday a $10 billion plan to buy back stock held by investors, helping push shares up 8 percent to above $79 in trading before the opening bell Tuesday. RTX shares remain off about 20 percent from their price at the start of the year.
Speaking Tuesday morning on a conference call, RTX executives said it is taking just over a month to inspect each jet engine and that it is ramping up production of replacement parts. The company has also been inspecting other Pratt & Whitney engines used by airlines, with no major new issues having been discovered. Pratt & Whitney operates maintenance and repair "shops" at airports globally.
In parts for its PW1100G geared turbofan engines used on Airbus A320neo passenger planes, Pratt & Whitney used powdered metals that it subsequently discovered could have contaminants that increase the possibility of corrosion and cracks after extensive use.
"We really do have our arms around the powdered metal issue," said RTX CEO Greg Hayes on Tuesday morning.
RTX is now footing the cost of putting Pratt & Whitney PW1100 engines through accelerated inspections, which requires removing engines from wings and disassembling components to scan parts for any problem areas that might fail.
Airbus also uses LEAP jet engines sold through the CFM International joint venture of GE Aviation and Safran.
"Obviously its a challenging time for the customers — there's a fair amount of aircraft on the ground" unable to fly until cleared, said Chris Calio, chief operating officer for RTX and previously head of Pratt & Whitney. "This was an incredibly rare defect — we hadn't seen it before."
Calio said the company has outside consultants who have been reviewing Pratt & Whitney processes, and that RTX implements their recommendations.
"We're also making investments in machine learning so that we can look at all of the thousands and thousands of inspection records and data that we've got in house, to help us better identify and ... get out ahead of issues before they turn into something unfortunately that has an impact on the fleet and on our customers," Calio said.
In all, Airbus has delivered more than 1,800 of the A320neo aircraft to customers, with Frontier Airlines, JetBlue and Spirit Airlines among U.S. carriers using the plane. All three provide service to and from Bradley International Airport located about 15 miles north of Pratt & Whitney's engine assembly headquarters plant in East Hartford.
"One thing I will say about Pratt — we're a long-standing customer — this is a storied institution in the United States," said Spirit CEO Edward Christie, speaking in August on a conference call with investment analysts. "They've always honored their commitments."
Includes prior reporting by Paul Schott and Luther Turmelle.
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