Shares of jet engine manufacturer Pratt & Whitney’s corporate parent fell again Tuesday, a day after it announced that shareholders will take a $3 billion hit on third-quarter profit as hundreds of its geared turbofan engines will be removed for inspections in the next three years.
Pratt & Whitney’s North Berwick plant, which employs 2,278 workers, is unaffected by the latest problems with these engines, said Jenny Dervin, spokeswoman. No forging is done at the plant nor is powder metal, the root of the problem, used at North Berwick. Powder metal is used to manufacture parts.
In June, the company was awarded an $81 million military contract for aircraft engines that was expected to spur hiring hundreds of additional workers at its Maine facility.
RTX Corp., formerly known as Raytheon Technologies Corp., disclosed the problem in July. It announced Monday that in connection with a “rare condition” in powder metal, about 600 to 700 engines will be removed for inspections between 2023 and 2026 beyond what the company expected. The accelerated removals and incremental inspections will result in higher numbers of aircraft on the ground, Raytheon Technologies said.
The fleet management plan will affect a total of 3,000 engines, Pratt & Whitney President Christopher Calio told analysts on a conference call Monday. The inspections will remove engines for 250 to 300 days on average, he said.
The “accelerated removals” will pressure airlines as travel rebounds following a steep drop during the COVID-19 pandemic.
“There is no question that the GTF has faced challenges since its entry into service,” RTX CEO Gregory Hayes told industry analysts. “To be clear, this latest disruption from the powder metal contamination is frustrating and will have a significant impact on our customers, on our partners and on RTX.”
Shares closed Monday at $76.90, down 7.9% from Friday. RTX closed Tuesday at $75.56, off 1.7%.
United Technologies Corp., the previous parent company of East Hartford, Conn.-based Pratt & Whitney, invested $10 billion over 20 years to design and build the GTF that was first installed on airline fleets in 2016. Its developers tout the GTF for its fuel savings and reduced CO2 emissions compared with earlier generation engines.
The inspection will affect engines that power the Airbus A320neo, a popular narrow body aircraft.
In 2016 and 2017 United Technologies was dogged by production problems, including the manufacture of a titanium fan blade.
North Berwick’s award was part of a multibillion-dollar military contract to build fighter jet engines. About $81 million is headed to Maine, or 4% of a $2 billion contract announced June 5 by the U.S. Department of Defense. An additional $7 million, or nearly 1%, of an $888 million initial award was previously announced.
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