UPDATE: Raytheon reports 10% sales growth and record backlog

By Bryan Corliss

April 25, 2023, © Leeham News – Raytheon reported a 10% increase in first-quarter sales and a record backlog of $180 billion in orders, amid what Chairman and CEO Greg Hayes called “continued global airline travel and defense systems demand.”

Among its commercial aircraft segments, Collins Aerospace had first-quarter sales of nearly $5.6 billion, up 16%. That was driven by a 24% increase in commercial aftermarket sales and a 12% increase in commercial original equipment sales.

Collins’ operating profit was up 80% from the first quarter of 2022, Raytheon said.

Meanwhile, Pratt & Whitney had first-quarter sales of $5.2 billion, up 15%, with a 27% increase in original equipment orders and a 14% increase in commercial aftermarket sales. 

Pratt& Whitney’s first quarter profit of $415 million was up 175% compared to the first quarter of 2022.

  • ‘Constant contact’ with OEMs on rates
  • Parts of supply chain stabilizing, COO says
  • Commercial aircraft sales lead growth
‘Constant contact’ with OEMs on rates

Raytheon executives said they will be able to meet demand from Airbus and Boeing as they increase production this year – although they acknowledged some uncertainty whether Boeing will increase 737 MAX production rates as planned, given the latest issues with the program.


“Boeing had talked about moving that up to 37 a month by the end of the year,” Hayes said. “Collins is, right now, all set at 31 a month, and it might get a little better during the course of hte year.”

But “Boeing has got some challenges,” Hayes said. “We’ll hear what they have to say (about rates) here in another day or so.” 

However, We’re in constant contact with both Boeing and Airbus on OEM rates both at Pratt and at Collins. So no surprises there to think of or to talk about.” 

Meanwhile, “we are lockstep with Airbus on their demand for the year,” Calio said. “And we are hand-to-mouth right now, given some of the constraints.”

Parts of supply chain stabilizing, COO says

A surge in air travel is pushing commercial revenues, Hayes said.

“Domestic revenue passenger miles are now back to pre-pandemic levels,” he said. “This was led by a very strong rebound in China, following their zero-Covid police reversal.”

Revenue passenger miles are now at 80% of 2019 levels, Hayes continued. “We expect total global air traffic to fully recover to 2019 levels as we exit the year.”

The travel growth led to strong sales in aftermarket parts, President and Chief Operating Officer Christopher Calio said. “With air traffic increasing and (aircraft) retirements remaining very low, we continue to see strength in parts, repair, provisioning and maintenance across our end markets.”

That means it’s essential for Raytheon to have “the capacity, supply chain performance and operational excellence necessary to meet our commitments,” Calio said.

Calio said Raytheon is seeing “stabilization in certain areas, such as electronics.” 

However, the company continues to “experience challenges in castings, forgings, raw materials and machining,” he said. 

Raytheon has support teams on-site at more than 400 of its suppliers, Calio said, and on the defense side, it “significantly” increased on-site supplier support to “help clear bottlenecks.” The company held a conference with 70 key suppliers “just a few weeks ago,” he said, to “review detailed action plans to ensure future capacity and to reduce current overdue positions.”

However, castings shortages continue to plague Pratt & Whitney in particular, Carlio said. 

“They key constrained castings at Pratt, they are up about 30%,” he said. “That’s not to the level of flow that we need. We continue to see some manpower sort of labor challenges in that supply change, and we’re taking some actions to try to address that.”

Commercial aircraft sales lead growth

Raytheon executives expect an increase of 35% to 40% in engine deliveries from Pratt & Whitney, along with aftermarket sales growth of 20 to 25%.

Executives said they’re seeing increasing demand at Collins for widebody aircraft components. “Those volumes are coming up, I would say,’ said Raytheon CFO Neil Mitchill. “(We are) particularly seeing that in the interiors business on the original equipment side, as they continue to take those production levels up.”

Aftermarket sales were strong in the first quarter, Mitchill continued. “The China reopening certainly gave a boost in the first quarter for Collins, and as we see (original equipment) deliveries continue to at least stabilize and grow as the year goes on … that too will add some tailwind there.” 

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