RTX Corp.’s second-quarter profit topped exceeded investor expectations as strong demand for air travel lifted the commercial aerospace units at the maker jet engines and military hardware.
Adjusted earnings were $1.41 per share in the period, the maker of jet engines and Patriot missile-defense systems said in a statement on Thursday. That’s better than the $1.30 average of analyst estimates compiled by Bloomberg. The company predicted adjusted earnings of $5.35 to $5.45 a share for the full year, up from its previous prediction of as much as $5.40.
The results show how new RTX Chief Executive Officer Chris Calio is navigating surging demand for aircraft parts and services to keep airlines flying amid supply chain challenges that have hampered production at suppliers and planemakers Boeing Co. and Airbus SE. Calio in May succeeded longtime CEO Greg Hayes, who remains executive chairman.
Free cash flow for the year will come in about $4.7 billion, less than the prior prediction of about $5.7 billion and compared with a Bloomberg estimate of $5.65 billion. The company lowered the target because of the expected resolution of legacy legal matters and a fixed-priced development contract with a foreign customer, Neil Mitchill, the RTX Chief Financial Officer, said in an interview.
The company is dealing with a massive recall of about 3,000 geared turbofan jet engines made by its Pratt & Whitney unit over faulty components that could fail prematurely. The engine is one of two turbines offered on Airbus’s top-selling A320neo-family planes.
The repairs will ground hundreds of Airbus’ top-selling A320neo aircraft over the next few years, disrupting carriers including Spirit Airlines Inc. and Europe’s Wizz Air Holdings Plc. RTX is also under investigation by US securities regulators over its disclosures about the callback.
Groundings for the repairs have held steady at roughly 540 planes, TD Cowen analyst Cai von Rumohr said in July 2 research note, citing data from analytics provider Cirium. That tally is consistent with RTX’s expectation for groundings to peak during the first quarter, at a count below the maximum 650 jets RTX originally said it expected to be idled, he said.
RTX has also been actively reviewing its portfolio as it looks to reduce debt. It agreed to sell a unit from its Collins Aerospace division to Arcline Investment Management-backed Signia Aerospace earlier this month. RTX is also in the process of selling an actuation and flight control business to Safran SA.
Today, the U.S. Department of Transportation’s Federal Aviation Administration (FAA) announced $1.9 billion for 519 grants in 48 states, Guam, Marshall Islands, Micronesia, Northern Mariana Islands, Puerto Rico, and the…
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