The aerospace sector is facing issues as the RTX jet engine issue flaw threatens to halt hundreds of Airbus jets worldwide. The unusual powder metal fault that causes cracks in engine components exacerbates current staff shortages and supply chain problems. RTX intends to inspect 600-700 Pratt & Whitney Geared Turbofan engines over the next three years, with substantial operational and financial consequences.
In a recent development, the worldwide aerospace industry is facing substantial issues as a result of a manufacturing fault in engines manufactured by the American company RTX. This issue has the potential to disrupt Airbus jet operations worldwide, resulting in higher prices and reduced plane capacity.
The root cause is a rare powder metal fault within the engines, which can cause cracks in vital engine components. This news comes as the aerospace industry is already suffering with workforce shortages and supply chain delays, despite a slow recovery in travel from pandemic lows.
Over the next three years, RTX aims to conduct quality assessments on 600 to 700 of its Pratt & Whitney Geared Turbofan (GTF) engines installed in Airbus A320neo aircraft. While the engine issue was first revealed in July, RTX has now highlighted the scope of the problem.
This statement has sent shockwaves through the industry, hurting not only component manufacturers like Japan’s Kawasaki Heavy Industries, but also airlines like Air New Zealand, which rely largely on Airbus jets. Because the repair process is expected to take longer, the situation may escalate tensions between airplane manufacturers and maintenance facilities.
This problem is expected to ground an average of 350 planes each year until 2026, with up to 650 aircraft idled during the first half of 2024. Originally estimated to take 60 days per engine, the repair operation is now expected to take around 300 days.
The problem is caused by minute impurities found in powdered metal utilized in high-pressure turbine discs within the core of the GTF engine. These pollutants have the potential to cause engine cracks. The engines in question were built between 2015 and 2021.
As a result of this revelation, RTX’s stock price has dropped by a quarter since the problem was revealed in July. This slump continued, with the stock dropping 3.7% to a two-year low. Raytheon and United Technologies merged in 2020, giving rise to RTX.
According to RBC Capital Markets analyst Ken Herbert, “the financial and operational impact identified is more substantial than we had expected.”
Airbus, which is listed on the Paris Stock Exchange, saw its shares fall 2.4% on Tuesday.
The consequences of this issue extend beyond RTX and Airbus. Cost increases are expected by aerospace suppliers involved in the affected engine program. Melrose Industries, a London-listed aerospace component manufacturer, estimates a possible effect of roughly $249.2 million.
The lengthier inspections are expected to have an impact on earnings at Japanese companies IHI and Kawasaki Heavy Industries, while German firm MTU Aero Engines has already warned of decreased profits.
Air New Zealand, which operates 16 A320neo aircraft, has raised concern about decreased engine availability, which will have a “significant” impact on its flying schedule beginning in January 2024.
Scoot, a Singapore Airlines subsidiary, is also affected, with inspections affecting four of its A320neo engines, potentially resulting in flight changes.
Wizz Air, a Hungarian carrier, has anticipated a 10% capacity cut in the second half of fiscal 2024.
It’s worth mentioning that RTX is one of two engine suppliers for the popular narrowbody Airbus A320neo, the other being CFM International, a GE-Safran joint venture. This development emphasizes the aerospace industry’s interconnection and the importance of quick and effective resolution to prevent interruptions.