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RTX plans to buy back an additional $10 billion in stock to take advantage of the sharp slide in its share price since disclosing quality problems with its latest jetliner engine during the summer.
The world’s biggest aerospace and defense company by sales reported a loss for the third quarter as it booked a charge to cover compensation and repair of geared turbofan engines that will require the grounding of hundreds of Airbus jets next year.
RTX’s market value has fallen by more than $30 billion since the problems were disclosed in July, and Chief Financial Officer Neil Mitchill said it is taking advantage of the low price to repurchase shares.
Mitchill said the cost and repair timelines for engines remained unchanged from its guidance in September.
Shares of RTX, previously known as Raytheon Technologies, jumped more than 6%.
Here’s more detail on how RTX did in the third quarter:
RTX reported a loss of $984 million for the third quarter. Excluding the engine charge, per-share earnings of $1.25 beat the consensus among analysts polled by FactSet by 3 cents.
Adjusted sales rose 12% to $18.95 billion in the quarter, topping analysts’ estimates, with backlog rising to a record $190 billion after a third consecutive quarter of double-digit growth.
RTX also agreed to sell its cybersecurity and intelligence business for $1.3 billion to an undisclosed customer.
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Anyone who has walked into a used-car dealership knows about the risks of being sold a lemon. When it comes to aircraft, however, it is the newer models that seem more likely to leave owners stranded.
The price tag for a 10-year-old Airbus A320-200—the backbone of the world’s short-haul fleet—has risen 10% since August, according to appraisal data from aviation-analytics firm Ishka. The popularity of trusty clunkers is rising because of issues affecting the newer version of the plane, the A320neo, introduced in 2016.
And it isn't an isolated case: The rival engine to the GTF is also suffering from durability issues. Ever since Boeing botched the development of the 787 Dreamliner in the 2000s, aerospace firms have been battling to rectify defects. As engineering more fuel-efficient jets keeps getting harder, future models may become even less reliable upon introduction.
The implication is that midlife jets may have a permanently higher “residual values,” which is good for lessors like AerCap and Air Lease Corporation, as well as aircraft asset-backed securities.
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Plane maker reports rise in quarterly profit as it delivers more jets despite supply-chain snags
An increase in orders for narrow-body jets including the A321 helped boost Airbus’s third-quarter income.
Airbus SE plans to ramp up production over the course of next year, despite persistent supply-chain disruption, as the European plane maker extends its lead over rival Boeing Co. BA 0.34%increase; green up pointing triangle in the crucial market for smaller jets.
The Toulouse, France-based company on Friday confirmed plans to lift production of its A320 aircraft to 65 a month by early 2024 from about 50 a month at the end of this year, one of the fastest increases in the company’s history. The move comes as demand for Airbus’s family of A320 narrow-body aircraft outstrips that for Boeing’s rival 737 MAX but also as both plane makers grapple with continuing supply-chain issues.
Airbus has been gaining market share over Boeing since the grounding of the 737 MAX, with the split between the two most popular narrow-body programs at 61-39 in favor of the A320neo as at the end of September, according to an analysis of both companies’ backlogs by research firm Agency Partners.
The market-share split is a closely watched measure in the aerospace duopoly. As Airbus extends its lead, the company is able to produce more aircraft, enabling it to push for better pricing with suppliers that it can use to either boost profitability or undercut pricing from Boeing.
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Deliveries and production of the company’s bestselling jet slowed in September amid snafus at one of its key suppliers
Boeing said it delivered 15 new 737 jets to the world’s airlines in September. Deliveries of Boeing’s 737 MAX jets to customers fell in September to the lowest level in more than two years, laying bare how one of the U.S.’s largest manufacturers is struggling to churn out enough jets to fill the skies.
The company’s operations have been disrupted this year by a series of snafus at one of its key suppliers. The latest problem, discovered in August, is misdrilled holes on the fuselage of its bestselling 737s. As a result, production of the more than $100 million jet—which accounts for the bulk of Boeing’s output— is running at about half the company’s target.
Boeing executives have said that deliveries would slow but that they still expected to meet their targets for the full year. Boeing said earlier this year that it was moving to complete an average of 38 new 737s a month. It made 22 in September, according to data from Aero Analysis Partners/AIR, a research firm.
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Regulators refocus on alerts that are often unused or still under development, as pilots try to avoid close calls
An Airbus system warns pilots with a screen alert that a runway is too short. PHOTO: AIRBUS
Technology to alert pilots of potential runway crashes is widely available. Audible warnings and text alerts to help avert catastrophe on the tarmac are often standard features on new aircraft.
In many cases those features aren’t turned on.
Regulators have been reluctant to require their use. Some pilot groups have pushed for airlines to adopt such features, but carriers have had doubts about their safety benefits and costs.
“There are solutions right now,” Capt. Steve Jangelis, a top union official in the Air Line Pilots Association, said at a runway-safety forum earlier this year.
The U.S. hasn’t had a major fatal passenger airline crash in 14 years, but runway-safety alerts for pilots are getting renewed attention after a spate of serious close calls at American airports. Industry officials have debated whether inexperienced or fatigued pilots are a factor, or distraction among short-staffed air-traffic controllers.
U.S. air-safety and some industry officials are weighing whether to add more cockpit protections as pilot and air-traffic controller workforces navigate a surge in postpandemic flying, while airlines ramp up reminders to pilots about existing procedures.
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Aircraft maker posts quarterly loss on production troubles
Boeing employees assemble 787s inside the main assembly building on the campus in North Charleston, S.C. PHOTO: POOL/REUTERS
Boeing BA -0.45%decrease; red down pointing triangle booked a third-quarter loss and lowered delivery goals this year for its 737 MAX jet, which accounts for the bulk of the plane maker’s output.
Boeing lost $1.64 billion in the quarter ended Sept. 30, more than analysts expected, and it reported negative cash flow from its operations. But the company met expectations for sales, and executives kept their full-year and medium-term financial guidance unchanged.
MAX production has been running at about half the company’s target while Boeing and one of its largest suppliers race to fix misdrilled holes on the jet’s fuselage.
“When we set our recovery plans, we knew issues would come up along the way,” Boeing Chief Executive Dave Calhoun wrote in a message to employees. He said improved quality procedures and a culture that rewards speaking up about problems means the company is finding more things in need of repair.
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Engine maker Pratt to recall 1,200 engines over 12 months just as Airbus is trying to cement its supremacy in narrow-body jets
LONDON—Airbus faces another high hurdle in delivering its bestselling jets as it races to solidify a commanding lead over rival Boeing BA -2.01%decrease; red down pointing triangle.
Airbus has been working to rapidly increase output of its bestselling A320 family of aircraft as it seeks to deliver on a backlog that now stretches out into the early 2030s. Many of those planes are powered by a certain type of Pratt & Whitney engine, which the engine maker said earlier this week will need to be recalled and inspected.
Pratt said it would need to inspect 1,200 of its geared-turbofan engines after it discovered a fault in the metal that could lead to cracking. Both Pratt and Airbus have said the issue doesn’t impact the safety of the aircraft.
The recall could further slow Airbus’s plans for higher production rates of the jet. With the affected engines being taken out of service, Pratt will need to hold on to more of its new engines for a spare-engine pool.
It keeps those reserves for planes needing engine maintenance. That in turn means it can provide fewer engines needed by Airbus for new aircraft deliveries.
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RTX says engines are affected by contaminated metal parts that could crack over time
The fuel-efficient Geared Turbofan engine has had reliability problems since it was introduced in 2015. Hundreds of Airbus jetliners will require inspections after a new problem with their Pratt & Whitney engines, adding another potential airline disruption in coming months.
Pratt parent said recently discovered contamination in the metal used to make some engine parts required the planes to be inspected to check on whether repairs were required.
The contamination could cause cracks to form in critical engine parts. The new problem exacerbates the shortage of new, fuel-efficient engines that has sidelined dozens of Airbus and Boeing jetliners worldwide after parts wore out faster than expected.
The recall isn’t expected to have an immediate impact on travel because only a fraction of the engine fleet that has flown the most will be inspected over the next six weeks.
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