- RTX warned this quarter it would take a $3 billion charge on its troubled passenger jet engines.
- Pratt & Whitney engines are used on the popular Airbus A320 Neo aircraft.
- RTX shares fell to their lowest level in more than two years following the news.
Shares of RTX ( RTX ) fell nearly 8 percent after the jet engine maker said it would cost $3 billion this quarter to recall jet engines made by its Pratt & Whitney division.
About 600 to 700 GTF engines used on Airbus A320neo passenger jets will be removed for shop inspection between this year and 2026, ahead of Pratt & Whitney’s earlier schedule. The company, formerly known as Raytheon Technology, said most of the inspections will take place this year and next.
RTX said the additional costs were related to a previously described “unusual situation in powder metallurgy” to make certain parts for the GTF engines that required more testing than previously thought.
CEO Greg Hayes said the company is focused on the challenges associated with the powder metal crisis, and “This is an extremely difficult situation for our customers, and we are actively taking steps to support and minimize the operational impact for them.”
RTX also noted that while the issue is not expected to impact sales and margins in 2025, it will impact free cash flow by approximately $1.5 billion, resulting in free cash flow of approximately $7.5 billion in 2025.
Following the news, RTX shares fell 7.9% to their lowest level since March 2021.