PARIS, June 19 (Reuters) – RTX (RTX.N) expects to take a $500 million hit to free cash flow due to a supply chain problem with the GTF engine made by its Pratt & Whitney subsidiary, the company said during an investor day on Monday.
GTF deliveries that are delayed in the second quarter will be recovered in the third quarter, RTX Chief Operating Officer Chris Calio said.
The issue involves a part that a supplier wrongly installed on a number of GTF engines, said Calio, who declined to name the company involved or the total number of engines affected. The part will need to be taken off the engine and replaced.
RTX announced a rebranding from its former name, Raytheon Technologies, on Sunday.
The GTF, one of two engine options to power Airbus’ (AIR.PA) A320neo aircraft, has suffered durability problems and Pratt & Whitney has been struggling to support airline customers with enough spare parts and engines
GTF engines are not moving through maintenance overhauls “fast enough to get them back out to our customers” without aircraft sitting on the ground waiting for engines, Calio said.
Currently, overhauls can take in excess of 120 days, well beyond the 90 to 100 days expected, due to supply chain and labor issues, he said.
“We have started to turn that corner and May was probably our highest output of the year,” Calio said. “Our intent is to get the fleet into a much more manageable position in the second half of the year.”
Reporting by Valerie Insinna
Editing by Sudip Kar-Gupta and Mark Potter
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