2023-09-11 20:36:00
The blow is severe for the American engine manufacturer Pratt & Whitney and its parent company RTX. After revealing in July the presence of “microscopic contaminants” in a metal powder used to produce certain parts for the PW1100G-JM engines, the equipment manufacturer detailed the operational and financial consequences of this situation. And the toll will be heavy for Pratt & Whitney, but also for the operators of hundreds of Airbus A320 NEO family aircraft equipped with these engines.
“To be clear, this new disruption due to metal powder contamination is frustrating and will have a significant impact on our customers, partners and RTX”, assumed from the outset Gregory Hayes, CEO of RTX. The manager then confirmed the implementation of a fleet inspection and management plan to deal with this contamination, which potentially affects PW1100G-JM (also known as “GTF”) engines produced between the end of 2015 and 2021. No less than 3,000 engines are affected by this plan.
“We have literally worked day and night to develop the GTF fleet management program to meet the enhanced inspection requirement that we discussed in July,” assured Gregory Hayes, CEO of RTX.
And a new problem for the Pratt & Whitney engine which equips certain Airbus A320neos
Planes grounded
Result: many engines will need to be inspected to check the condition of the turbine and high-pressure compressor disks. Around 600 to 700 engines will thus be deposited for workshop visits between 2023 and 2026, in addition to the visits already normally scheduled. The majority of these filings will take place by early next year. Changing the discs and reconditioning the engines will require major interventions, lasting between 250 and 300 days, before they can be put back into service.
These engine removals will have a significant impact for companies operating A320 NEO family aircraft. Although Pratt & Whitney’s current production is not affected by this contamination, the engine manufacturer will have difficulty ensuring at the same time the replacement of affected engines and the commissioning of new engines and parts. This will therefore result in the immobilization of a very large number of Airbus A320 and A321 NEOs.
“We now expect an average of 350 aircraft grounded for the fleet of A320s powered by the GTF from 2024 to 2026, with a peak of 600 to 650 aircraft grounded during the first half of 2024”, had to resolve to announce Christopher Calio, Director of Operations.
For its part, Airbus assured Pratt & Whitney of its support for the implementation of this plan and limiting the potential indirect consequences. The manufacturer assured that it “there is no direct impact on the delivery of Pratt & Whitney engines to Airbus, and therefore from Airbus to our customers”. At least for 2023. The question will arise more later, as Guillaume Faury, executive chairman of Airbus, declared last July: “To summarize, I don’t expect any disruptions in 2023 for us. Looking ahead to 2024/2025, there is a lot of work to be done on potential indirect consequences at Pratt. »
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A heavy financial impact
The bill will run into billions of dollars over several years. RTX announces that this inspection and management plan for the affected PW1100G-JM fleet will have a gross impact of around $6 to $7 billion. 51% owner of the program, Pratt & Whitney will see its operating income hit to the tune of $3 billion to $3.5 billion, with a one-time charge of approximately $3 billion in the third quarter of this year.
Partner of the program, the German engine manufacturer MTU Aero Engines estimates that this will weigh up to $1 billion on its operating income in 2023, as reported by Archyde.com.
The situation will also have repercussions on RTX’s cash generation, which forecasts a total cash loss of around $3 billion between 2023 and 2025. The group has thus revised its free cash flow objective in 2025 by 9, 5 to 7.5 billion dollars.
“The financial charges related to the metal powder manufacturing issue, which will be recognized this quarter, reflect the impact of this matter and how we plan to support our customers. That said, RTX’s financial position remains strong and we remain well positioned to implement our strategic priorities.”, said Neil Mitchill, financial director of RTX, still trying to be reassuring. Just like Gregory Hayes, who concluded his presentation by reminding that this was not a structural problem for the PW1100G-JM.
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