RTX swings to loss on Pratt engines issues, approves $10 billion share buyback program
(Reuters) — RTX reported a near billion dollar quarterly loss on Tuesday, as the aerospace supplier took a hit due to a major quality crisis at its subsidiary Pratt and Whitney, affecting the popular Geared Turbofan (GTF) engines.
The company also said it has approved a $10 billion share repurchase program, which would commence almost immediately.
In its second-quarter earnings report, RTX disclosed it had found microscopic containments in powdered metal, used to manufacture high-pressure turbine discs that are part of the engine's core, the presence of which could lead to cracks in the engine.
RTX had at the time said 200 engines would require «accelerated inspection» with 60 days to fix each engine with a contamination issue.
However, two months later, RTX devised a fleet management plan for the affected PW1100 GTF engines and expanded the scope of inspection to pull up to 700 engines off aircraft for lengthy quality inspections.
«We do not expect any significant future incremental impact as a result of these fleet management plans,» RTX CEO Greg Hayes said on Tuesday.
Pratt and Whitney, a unit of RTX, booked a $2.48 billion operating loss in the reported quarter related to engine recalls and compensations to airlines.
RTX reported a third-quarter loss of 68 cents per diluted share, or $984 million, compared with a profit of 94 cents per diluted share, or $1.39 billion, a year earlier. It posted an adjusted profit of $1.25 per share.
On the other hand, RTX reported a higher revenue compared with a year earlier, boosted by broader commercial air traffic recovery and higher defense spending from both the U.S. and allies.
RTX's third-quarter adjusted sales rose 12% to $18.96 billion.
The aerospace supplier also
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