Raytheon Technologies Corp.’s stock tumbled 10% Tuesday, its worst day in more than three years, after the aerospace and defense company said it needs to remove certain Pratt & Whitney jet engines from service for inspection. The stock
RTX,
-10.22%
ended at its lowest since Oct. 17, when it closed at $84.47. It suffered its biggest one-day percentage decline since March 18, 2020, when it fell 14.5%, and was the worst performer in the S&P 500 index
SPX,
+0.28%.
The engine business has determined that a rare contamination in powdered metal used to make certain engine parts will require accelerated fleet inspection, the company said, calling it an issue that “has recently come to light.” Related: Here are the U.S. airlines most likely to take a hit from Raytheon’s jet-engine problem While the issue does not affect engines currently being produced, a “significant” portion of the PW1100G-JM engine fleet, which powers the Airbus
AIR,
-2.45%
A320neo family of narrow-body airliners, will need to be removed and inspected in the next 9 to 12 months, including about 200 accelerated removals due by mid-September. U.S.-listed shares of Airbus
EADSF,
-2.31%
fell 2.5%. “The business is working to minimize operational impacts and support its customers,” Raytheon said. On the company’s earnings call, Chief Executive Greg Hayes said the company understands the issue and has begun to address it. “That said, clearly this will have an impact on Pratt & Whitney and our customers,” he said, according to a FactSet transcript. Chris Calio, chief operating officer, said the issue is that the powdered metal used to produce certain engine parts may reduce the life of those parts. The metal has been used in Pratt’s products for decades, but the company has determined that the contamination was present in rare instances in metal produced from roughly the fourth quarter of 2015 into the third quarter of 2021. Beyond the initial 200 engines to be removed, Pratt is expecting that about 1,000 additional PW1100 engines will be removed for enhanced inspection. Some were already on track to be sent for regular shop visits in 2023 and 2024. “And so the incremental impact to the fleet is still under evaluation,” Calio said. “Capability to perform the accelerated inspections, which are focused on the high-pressure turbine disks, is already in place, and …
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