By Scott Hamilton
Oct. 22, 2024, © Leeham News: RTX Corp, the parent of troubled engine maker Pratt & Whitney, posted strong financial results for the third quarter today.
PW continues to struggle with replacing engines plagued by technical defects that have grounded nearly 600 Airbus A320neos worldwide. But year-over-year financial results are markedly improved.
Another subsidiary, Collins Aerospace, which makes a variety of components and interiors, reported higher results YOY.
RTX reported $20.1bn in revenues (+6% YOY)m operating cash flow of $2.5bn, free cash flow of $2bn, and returned $1.1bn of capital to shareholders. Net income was $1.472bn vs a loss of $984m in the prior year.
PW reported $7.2bn in revenue for the period vs a mere $926m in 3Q2023. The operating profit was $557m vs a loss of $2.48bn. Despite all the costs taken against the Geared Turbo Fan engines as PW struggles to replace a defective powder on a large installed fleet, aftermarket maintenance, repair and overhaul work drive the YOY improvements on the commercial side. The defense side of PW also saw a 20% increase in revenues.
Collins is hampered by delays in its interiors division, but revenues were up 7% YOY, largely through a 14% increase in components sales to the military. The commercial aftermarket was up 9%. Collins reported an operating profit of just over $1bn on sales of $7.07bn.
Despite these positive results, investment bank Goldman Sachs reported the results were below consensus.
“Segment Earnings Before Interest and Taxes (EBIT) is below driven by the Collins margin. Revenue is ahead at Pratt, and slightly below at Collins and Raytheon. EBIT is ahead at Pratt and Raytheon and below at Collins. Segment EBIT margin of 11.4% is below implied consensus at 11.9%,” Goldman wrote.
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By Scott Hamilton
Oct. 21, 2024, © Leeham News: Third quarter earnings reports kick off this week. The most anticipated call will be The Boeing Co.
Boeing previewed a big loss for the quarter on Oct. 11. On Oct. 15, it filed a registration statement with the US Securities and Exchange Commission (SEC) for $25bn in equities, debt, and other securities—money that’s badly needed as it bleeds cash. It also filed another SEC document for a “supplemental” $10bn line of credit. This is in addition to a previous $10bn credit agreement.
Coupled with the $10bn in cash, Boeing potentially has up to $55bn in liquidity.
With the quarter’s loss already pre-announced and the new $25bn liquidity plan filed with the SEC, much of the suspense for Boeing’s earnings call is over. Also on Wednesday, the company’s largest union, the IAM 751 workers, vote on a new contract offer to end a strike closing in on its sixth week. Further color about CEO Kelly Ortberg’s “reset” plan for the company will be closely watched.
Boeing’s earnings call is Wednesday at 10:30 am EDT. The press release will be issued before the stock market opens. The union vote will be announced Wednesday evening.
In addition to Boeing’s earnings call this week, RTX (parent of ailing Pratt & Whitney) and GE Aerospace announce their earnings on Tuesday at 8:30 am EDT and 7:30 am EDT, respectively.
RTX results continue to be dragged down by PW’s continuing technical challenges with the Gear Turbo Fan engines that power the Airbus A220, A320neo and Embraer E-Jet. GE faces a drag on late deliveries and time-on-wing issues with its LEAP engines that power the Boeing 737 MAX and A320neo. GE is also affected by all the production turmoil and IAM strike at Boeing.
Germany’s MTU Aerospace reports on Thursday as well. MTU is a supplier to PW and GE. Safran reports on Friday.
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By Scott Hamilton
Oct. 4, 2024, © Leeham News: RTX, maker of the Pratt & Whitney Geared Turbo Fan engine and a large supplier to Airbus, Boeing, Embraer, and others through various divisions, continues to struggle with its supply chain.
CEO Greg Hayes told the US Chamber of Commerce Aviation Summit last month that “as much as we had contingency plans for pandemics, and I go back to the early 2000s with SARS and how the airlines managed through that, we were completely unprepared for COVID. Absolutely completely. There was no playbook.
“How do you keep your employees safe? How do you keep the airlines flying, despite the fact that there were very few passengers? How do you maintain all of your systems?”