ARLINGTON, Va. -- RTX is providing an update on the impact to the Pratt & Whitney GTF fleet arising from the previously disclosed rare condition in powder metal used to manufacture certain engine parts. As a result of recent updates to this matter, RTX will recognize a third quarter charge which will impact reported sales and earnings for the year.
"We are focused on addressing the challenges arising from the powder metal manufacturing issue," said RTX Chairman and CEO Greg Hayes. "We will never compromise on the safe operation of our fleet, which is why the Pratt & Whitney team has worked diligently to develop its fleet management plan. At the same time, we recognize this is an extremely difficult situation for our customers, and we are proactively taking steps to support and mitigate the operational impact to them."
As previously disclosed, Pratt & Whitney has determined that a rare condition in powder metal used to manufacture certain engine parts will require accelerated inspection of the PW1100G-JM (GTF) fleet, which powers the A320neo.
On August 4, 2023, Pratt & Whitney issued a special instruction (SI), to operators of GTF powered A320 aircraft, requiring accelerated inspections and engine removals covering the initial tranche of operational engines, no later than September 15, 2023.
Pratt & Whitney has also recently developed a fleet management plan for the remaining affected PW1100 GTF engines requiring a combination of a repetitive inspection protocol, at an interval of between approximately 2,800 and 3,800 cycles, and part life limits of between approximately 5,000 and 7,000 cycles, for high pressure turbine disks and high-pressure compressor disks. This fleet plan is expected to be released in one or more service bulletins (SB) within the next 60 days, following alignment with regulators. The actions set forth in the SI and SB are anticipated to result in approximately 600 to 700 incremental shop visits between now and the end of 2026 beyond Pratt & Whitney's forecast entering 2023. A majority of the incremental engine removals will occur in 2023 and early 2024. As a result, Pratt & Whitney expects a significant increase in aircraft on ground levels for the GTF powered A320 fleet throughout 2024 - 2026.
The ultimate operational impact of the powder metal issue is subject to various data-driven assumptions that Pratt & Whitney continues to refine, including, among other items, shop visit quantity, workscope, turnaround time, and part availability. However, Pratt & Whitney is taking action to increase industrial output and shop visit capacity, as well as other measures, to mitigate the potential impact of this matter. Further, the business is analyzing the impact of powder metal on other engine models within its fleet and currently believes that other models will be far less impacted based on existing inspections, lower utilization profiles and/or existing maintenance intervals. Pratt & Whitney continues to deliver new engines and spare parts for the PW1100 GTF and its other engine models.
RTX will record a pre-tax operating profit charge in the third quarter of 2023 of approximately $3 billion. This reflects Pratt & Whitney's net 51% program share of the PW1100 GTF program. This includes estimates of potential compensation and other consideration for customer fleet disruption and the one-time Estimate-at-Completion ("EAC") impact of estimated incremental costs to long-term maintenance contracts as a result of this matter. The incremental costs to the business's long-term maintenance contracts include the cost of additional inspections, replacement of parts and other related impacts.
RTX expects reported 2023 sales of $67.5 billion to $68.5 billion, with no change to its prior 2023 outlook for adjusted sales of $73 billion to $74 billion.
