GTF powder metal issue keeps P&W busy well through 2026 |

UPDATE - Not 1.000, but another 600 and 700. That is the number of incremental shop visits that Pratt & Whitney-parent RTX is guiding for inspections and repairs of Geared Turbofan (GTF) engines that are affected by the powder metal contamination issue. The rework will extend well into 2026, far longer than late 2024 which RTX guided in July. The gross financial impact of the issue has now soared to between $6.0 and $7.0 billion, RTX said on September 11. RTX first disclosed the powder metal contamination issue on the GTF in July. Powder metal that had been fabricated in one of the company’s own facilities was found to be contaminated and included microscopic iron particles. It was the root cause of an uncontained engine failure on a V2500 in March 2020. Further investigation learned that the issue extended to the GTF. High-pressure turbine stage 1 and stage 2 disks on the PW1100G-JM used on the Airbus A320neo family that were produced between Q4 2015 and Q3 2021 have the same flaw. In late August, RTX said that High-Pressure Compressor stage 7 parts were also suspected and that the PW1400G-JM used on the Yakovlex/Irkut MC-21 likely was also affected. Asked today why the contamination hadn’t been picked up before, Chairman and CEO Greg Hayes said that the company didn’t have the techniques at the time. The focus on the production ramp-up was another factor why it hadn’t been observed. In July, RTX said that 200 engines would need to come off wing for inspection and repairs before mid-September. Another 1.000 engines would likely require inspection and repairs through 2024, of which some needed accelerated inspections while others could continue to fly until scheduled maintenance. More details were to follow. 600-700 incremental shop visits Following further analysis of the issue and the development of a fleet management plan for the affected PW1100G-JM engines, Pratt & Whitney has come up with revised numbers. It now expects between 600 and 700 incremental shop visits between now through 2026. Between 2024 and 2026, there will be on average 350 aircraft on ground, with a first peak of some 650 expected next year. The total number of engines affected by the issue is now some 3.000. Repairs are expected to take 250-300 days until engines are back on the wing, which will cause huge problems for airlines. These engines require "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.” These numbers and 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.” P&W is still investigating the extent of the powder metal issue on other engine GTF models and other engines. Analyses of the PW1500 and PW1700/1900 engines will be completed this month, but Chief Operating Officer Chris Calio said he expects repairs can be done within the regular shop schedules. That’s the aim of the rework to minimize the impact on customers, Hayes added. As the V2500 is already part of an extensive review since the problems first emerged on this engine, no additional impact is expected. The company says that it “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.” Gross impact of $6.0 to $7.0 billion The contamination issue will have a gross financial impact on the GTF program of $6.0 to $7.0 billion, confirmed Calio. This will have to be shared with other partners in the program, including MTU Aero Engines, Mitsubishi Heavy Industries, and GKN Aerospace. MTU said in a media statement on Monday that "this might result in a reduction in revenues and reported EBIT of around 1 billion euros in the current financial year." The company added that “it is not possible at this stage to make a precise assessment of the impact on MTU’s forecast for the current financial year. However, MTU feels compelled to make its otherwise stable forecast for the financial year 2023 subject to the impact of this circumstance on revenues and earnings. MTU will initiate measures with the aim of limiting the aforementioned effects as far as possible.” GKN Aerospace owner Melrose said on Tuesday that "the full potential cash impact to Melrose spread over the period to 2026 could be in the range of around £200 million, if it was assumed that this is all a program cost." It adds that these assumptions are conservative. GKN Aerospace has a four percent share in the PW1100G-JM program. Mitsubishi has not shared details of the financial impact on its business. Pre-tax charge RTX said that it will record a pre-tax operating profit charge in Q3 of approximately $ 3.0 billion. “This reflects Pratt & Whitney's net 51 percent 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.” In its update, RTX says: “Although the company expects a modest impact to Pratt & Whitney's 2025 margin targets, at the RTX level, these initiatives, along with our company-wide sales growth, continue to support RTX's adjusted segment margin expansion commitment of approximately 550 to 650 basis points from 2020 to 2025.” “While the impact of the powder metal matter is not currently expected to have a significant impact to sales and margins in 2025, Pratt & Whitney's free cash flow will be impacted. The exact timing of the cash impact is subject to a number of factors, and we currently estimate that the impact to 2025 free cash flow will be approximately $1.5 billion to RTX, resulting in an estimated RTX 2025 free cash flow of approximately $7.5 billion. (…) RTX remains confident in its ability to return $33 - $35 billion in capital to its shareowners from the merger through 2025.”

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