By Chris Sloan

October 21, 2025, © Leeham News: RTX delivered a solid and steady third quarter, marked by broad-based growth, improving GTF maintenance output, and continued strength at Collins Aerospace—even as tariff headwinds persisted. Company sales rose 12% year-over-year to $22.5bn, or 13% organically, while adjusted segment operating profit increased 19%, marking the sixth consecutive quarter of year-over-year margin expansion. Net income attributable to common shareholders climbed to $1.9bn, up from $1.4bn a year ago.

Chairman and CEO Christopher Calio credited strong execution across all three segments for the performance, citing double-digit growth in commercial OE, aftermarket, and defense. RTX booked $37bn in new awards during the quarter—$23bn in defense and $14bn in commercial—lifting total backlog to $251bn, up 18% since the end of 2024.

With passenger traffic holding firm and OEM production trending higher, Collins and Pratt both benefited from robust aerospace demand. Calio said the company is raising its full-year outlook for adjusted sales and operating profit, supported by the ongoing production ramp and a stabilizing supply chain.

The conversation around the GTF program has shifted: improved MRO throughput and material flow replaced the usual focus on compensation and grounded aircraft, and for the first time in recent memory, the familiar “powdered-metal” refrain was absent from the call—an indication that Pratt’s recovery is turning a corner.

Tariffs still on the radar

Tariff headwinds continued to weigh on RTX’s margins in the third quarter, though executives said mitigation efforts are making gradual progress. Chief Financial Officer Neil G. Mitchill Jr. said both Collins Aerospace and Pratt & Whitney faced about $90 million each in year-over-year tariff impact. “If you put that aside, the team’s doing a great job making that a smaller number as we move forward,” he said. “A number of mitigations have been identified—that’s really the key driver of what’s been dragging down margins.”

Mitchill added that RTX is continuing work to support product qualification for USMCA treatment, improve re-export procedures, and manage costs through pricing adjustments. “You’ll see that again in the fourth quarter for both Collins and Pratt,” he said, noting that the headwinds are expected to persist but at a manageable level.

The Chief Executive said both businesses have been “appropriately aggressive” in pricing given the market environment. “We’ll continue to be aggressive on catalogue pricing because of the value we bring and the demand that’s out there,” he said.

Pratt & Whitney: throughput improves as execution steadies

Pratt & Whitney continued to build operating momentum in the third quarter as production and MRO throughput improved across key programs. Calio said the business “executed well through the production ramps,” maintaining close coordination with Airbus and other OEMs to meet delivery schedules while balancing material allocation to the in-service fleet.

Production levels are now more than 50% higher than in 2019, supported by steady increases in large commercial engine output and stabilizing supply-chain flow. Calio said the company will “continue to work very closely with Airbus to make sure they have what they need down the stretch of the year,” while keeping the focus on fleet support and throughput.

Chief Financial Officer Neil G. Mitchill Jr. said the outlook for Pratt’s negative engine margin remains unchanged—still within the $150–$200m year-over-year headwind, expected to end near the midpoint of that range. New GTF deliveries are projected to grow 8–10% this year, consistent with earlier expectations.

Segment sales rose 16% to $8.4bn on both an adjusted and organic basis, with adjusted operating profit up $154m to $751m. Growth was driven by stronger commercial OE volume and productivity improvements, which offset higher SG&A costs and ongoing tariff impacts.

On customer compensation payments related to the GTF fleet, Mitchill said the financial outlook “remains consistent” with prior guidance. “We’re right on track with where we expect to be this year—between $1.1bn and $1.3bn, with a slightly heavier fourth quarter and the residual carrying into next year,” he said.

As of mid-2025, 700 to 800 GTF-powered aircraft remained on the ground, mostly A320neo-family jets, along with several dozen A220s and Embraer E-Jets. The issue drew little focus on the call, with management instead emphasizing tangible improvement in material flow and shop throughput—signaling that Pratt’s recovery is shifting from crisis management to sustained execution.

GTF MRO and Services: throughput gains mark a turning point

Pratt & Whitney’s GTF maintenance and repair operations continued to improve in the third quarter, marking a key milestone in the engine family’s stabilization. Calio said the company’s financial and technical outlook “remains on track,” with PW1100 MRO output up 9% in the quarter and 21% year-to-date.

“We saw another quarter of solid progress,” he said. “Isothermal forgings were up 16% and structural castings up 29% year-over-year.” Those material flow improvements supported a record number of Gate 3 starts—the reassembly and test phase of an engine overhaul—putting Pratt on pace to deliver about 30% MRO output growth for the year.

Calio added that repair network performance has also strengthened. “Our repair network was up about 30% year-over-year, which helps lessen demand for new parts and improves flow earlier in the process,” he said. “We exited the quarter with roughly 80% of GTF MRO completions averaging a 110-day turnaround time, even on heavier work scopes.” He called higher MRO throughput “the key to continuing to push down AOG levels,” and said the company is “in a good position to reach that 30% level for the full year.”

V2500: strong, steady aftermarket runway

Mitchill said demand for the V2500 continues to run stronger than expected. “We talked about 800 shop visits for the full year, and we’re right on track,” he said. “It’s been pretty linear through the first three quarters, and we expect a similar level in the fourth.” Those shop visits are trending heavier, he added, contributing directly to top-line and margin growth.

The fleet’s age profile continues to support a long aftermarket tail. “It’s still a relatively young fleet—average age about 15 years,” Mitchill said. “Fifteen percent haven’t had a first shop visit, and forty percent haven’t had a second. There’s significant aftermarket runway ahead, and demand is stronger than we thought a year or two ago.”

Aftermarket momentum drives Pratt performance

Commercial aftermarket sales rose 23% year-over-year, driven by heavier shop visits in large commercial engines and a strong contribution from Pratt Canada. Mitchill said much of RTX’s overall profit increase in the quarter came from Pratt’s aftermarket. “About $1.1bn of the $1.6bn increase in segment profit sits at Pratt & Whitney, and the majority of that is in the aftermarket,” he said.

He also emphasized that Pratt continues to maintain balance across production channels. “We’re not heavily discounting spares,” Mitchill said. “We’re balancing installs, spares, and material to the MRO network. There’s strong demand across all of it—whether engines are going to Airbus, directly to airlines, or into MRO.”

Collins Aerospace: leveraging deep installed base, ready for ramp-ups

Collins Aerospace entered the final stretch of the year with a strong operational footing and a deep base of recurring work. Calio said the business’s $100 bn in out-of-warranty installed equipment gives it “an incredibly strong position to work from,” sustaining long-term aftermarket growth.

He added that Collins is nearing final certification of its next-generation braking system for the Airbus A321XLR, which uses proprietary carbon technology designed to extend brake life and improve profitability within the company’s maintenance support portfolio.

Calio said Collins remains aligned with both major airframers as production rates increase. “We’re aligned with Boeing on the rates they’re at now and where they want to go,” he said. “Collins has delivered at higher rates in the past, and we’ve got the capacity to support the volume ramp.” He noted that Collins’ readiness depends on continued supply-chain improvement, which has been “showing steady progress.”

Mitchill added that Collins and Boeing are now operating in sync after working through earlier channel inventory. “We’re pretty synchronized with Boeing and their delivery schedule,” he said. “The higher 787 mix brings some near-term margin challenges, but as rates rise toward the levels we’ve capacitized for, we’ll see better absorption and continued margin expansion.”

Segment sales reached $7.6bn, up 8% on an adjusted basis and 11% organically, driven by strength across all three channels. Commercial OE sales were up 16% year-over-year, while commercial aftermarket grew 13%, led by a 17% increase in mods and upgrades and a 13% rise in parts and repair activity. Adjusted operating profit climbed to $1.2bn, up $98m from a year ago, with higher commercial and defense volume offsetting the impact of tariffs and OE mix.

Supply chain: steady performance, capacity expanding

RTX continued to emphasize strengthening its supply chain and expanding manufacturing capacity to meet rising demand across programs. Calio said the company is investing over $600m this year in expansion projects aimed at increasing output in critical manufacturing areas.

“We continue to focus on increasing critical manufacturing capacity to support growth,” he said. “It’s about making sure the supply chain stays healthy.” RTX recorded its 10th consecutive quarter of material receipts growth, which Calio described as a positive trend but one that must continue to accelerate. “Performance has stabilized and been good,” he said. “We need to see it keep improving through 2026 and beyond, because the demand is there.”

Next generation: hybrid-electric propulsion on the horizon

Looking ahead, RTX is channeling part of its investment toward next-generation propulsion technologies. Pratt & Whitney Canada was selected by the EU’s Clean Aviation Program to design and integrate a hybrid-electric propulsion demonstrator for regional aircraft. The system combines a 250-kilowatt electric motor with advanced propeller technology from Collins Aerospace, targeting a 20% improvement in fuel efficiency.

The collaboration underscores RTX’s longer-term focus on sustainable propulsion and its strategy to align Pratt and Collins innovation pipelines for future aircraft platforms.

Financial close: RTX raises outlook after another strong quarter

RTX capped the third quarter with another steady performance, underscoring balanced execution and firm demand across both commercial aerospace and defense. Adjusted segment margins expanded for the sixth consecutive quarter, reflecting continued operational discipline and productivity gains.

Cash generation was particularly strong, with free cash flow of $4.0bn and operating cash flow of $4.6bn, both well ahead of last year. Management said the improvement was driven by aftermarket strength, higher volumes at Pratt and Collins, and ongoing cost control.

On the back of this performance, RTX raised its full-year 2025 sales outlook to $85.5–86.25bn and reaffirmed free cash flow guidance of $7.0–7.5bn, pointing to sustained demand and improving shop throughput at Pratt & Whitney.

Analysts characterized the results as solid and confidence-building. Robert Stallard of Vertical Research Partners said RTX “delivered another broad-based beat, with all three divisions contributing,” while Ken Herbert of RBC Capital Markets called the absence of new GTF cost disclosures “a net positive,” reflecting growing program stability. Seth Seifman of J.P. Morgan noted “strong operational results across each segment,” citing improving aftermarket profitability and tight cost control.