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<\/a>July 23, 2026 \u00a9 Leeham News: RTX is caught between serving two masters, OEMs and existing customers: Can Pratt & Whitney build enough engines to satisfy Airbus while keeping airline customers happy with engines, parts, and shop capacity?<\/p>\nRTX chief financial officer Neil Mitchill made clear that Airbus is getting more engines in the second half. \u201cAs it relates to our plans with Airbus, no change to our installs.\u201d P&W is instead \u201cswizzling some product between the spare engines and the aftermarket.\u201d Installed engine deliveries will increase during the second half, though the shift toward installs and away from spares will put pressure on original equipment revenue.<\/p>\n
RTX chief executive Christopher Calio, seeking to assure his biggest customer, said, \u201cWe\u2019re also going to continue to drive deliveries to Airbus. We\u2019ll be up in the second half of the year there,\u201d he stressed. \u201cAnd we\u2019ll deliver a record number of GTF engines this year.\u201d<\/p>\n
That commitment comes as Airbus has made no secret of its teeth-gnashing frustration over the pace of engine deliveries. P&W is simultaneously feeding the aircraft maker\u2019s production ramp and an aftermarket network serving a rapidly growing installed fleet, even as PW1100 aircraft-on-ground (AOG) levels have declined by 25% year to date. \u201cWe expect AOGs to continue trending lower throughout the second half of the year,\u201d he added.<\/p>\n
But that\u2019s still not fast enough for heavily impacted customers like Wizz Air, Indigo and Volaris, who do not see the multi-year mess ending until the end of 2027, with elevated numbers of grounded jets potentially dragging into 2028. The tear-down of youthful Airbus A320neos, such as those previously operated by now-defunct Spirit Airlines frames, is the result of both next-generation engine durability issues and supply chain woes.<\/p>\n
A more fruitful than expected Farnborough means the demand side of the equation isn\u2019t getting any easier. RTX received more than $20 billion in original equipment and aftermarket orders during the quarter, including AirAsia\u2019s order for 150 A220s\u2014the type\u2019s largest order yet, which are exclusively powered by GTF engines.<\/p>\n
Calio highlighted the AirAsia deal as \u201cadding a new GTF operator and further expanding our installed base in a key growth region.\u201d Lessor BOC Aviation\u2019s order for 220 engines to power incoming Airbus A320neo-family deliveries provided another backorder boost.<\/p>\n
Meanwhile, Bermudair ordered 10 A220 airframes, and Embraer secured 28 firm E2 orders spread across three specific airline operators.<\/p>\n
P&W has won 800 new GTF orders and commitments so far this year, pushing the total backlog past 8,000 engines. About 2,100 GTF-powered aircraft are currently in service around the world.<\/p>\n
Image from: RTX Q2 2026 Investor Presentation<\/p>\n War: what is it good for?<\/p>\n Demand remains robust, although the renewed conflict with Iran hangs over the commercial side of RTX\u2019s business, even as heightened geopolitical tensions are a boon to its defense business. Calio shrugged off the war\u2019s impact: \u201cAcross commercial aerospace, aftermarket continues to be strong and passenger air travel remains resilient.\u201d Global revenue passenger kilometers are expected to grow this year in every region except the Middle East, while engine retirements remain relatively low.<\/p>\n \u201cThe discovery of powdered metal contamination affecting more than 3,000 GTF engines in 2023 created [an] overhang on sentiment and estimates,\u201d noted Melius Research analyst Scott Mikus.<\/p>\n \u201cHowever, RTX\u2019s beat-and-raise quarter underscores the business\u2019s long-term potential,\u201d he said. \u201cSimply put, it was an outstanding quarter\u2026RTX\u2019s 14% EPS beat could very well be the largest in our coverage this quarter.\u201d<\/p>\n MRO business strong<\/p>\n P&W\u2019s GTF aftermarket generated increasing lift in the second quarter, with more engines moving through shops faster even as the work being performed on them became substantially heavier.<\/p>\n Maintenance, repair and overhaul (MRO) output increased more than 40% year over year, helped by a 23% reduction in turnaround time. On the PW1100G, output jumped 43%, despite work scopes increasing 14% from a year earlier. The improved shop performance helped drive the big drop in AOGs.\u00a0The situation remains much more acute on the A320neo series and largely resolved on the lower-thrust GTFs powering the A220 and E2.<\/p>\n \u201cThat was really driven by very solid MRO performance,\u201d Calio told analysts. But getting AOGs down further depends on parts flowing into a network that remains under considerable pressure.<\/p>\n P&W now has about 15 PW1100G shops in its MRO network, and Calio wants them to consistently turn engines in 90 days or less. \u201cWe need all 15 of those shops hitting that mark at that standard so that we can continue to make this a well-oiled machine in our aftermarket network,\u201d he emphasized.<\/p>\n RTX has recently announced investments of more than $100 million to expand GTF MRO capabilities at multiple facilities in Texas, Florida and Arkansas. The heavier shop visits are also consuming more material, which is one reason RTX continues to prioritize parts flowing into the MRO network.<\/p>\n The payoff is showing up. Commercial aftermarket sales at P&W increased 25%, while Mitchill said the company is raising its profit outlook and expects margin expansion to continue beyond this year as the GTF aftermarket gains scale. Powdered metal-related customer compensation was approximately $150 million during the second quarter, which is a relatively low sum compared with the $6-7 billion in customer compensation P&W has paid out over the past three years.<\/p>\n Advantage tackles time on-wing<\/p>\n P&W also reached an important milestone on the other half of the GTF equation: keeping engines out of shops longer.<\/p>\n The GTF Advantage received aircraft certification and P&W has begun delivering engines to Airbus. The upgraded engine is fully interchangeable with the existing GTF fleet and is designed to double time on-wing. It will also reduce fuel burn by about 1% over the standard build.<\/p>\n Entry into service is expected later this year, with a full production cutover planned for 2028. Mitchill said P&W will introduce additional material and improvements to the GTF over the next several years, which RTX expects will further improve aftermarket margins.<\/p>\n Fewer visits, bigger bills for legacy engines<\/p>\n Among P&W older engine products, the V2500 remains particularly important. Shop visits are tracking P&W\u2019s full-year expectations, work content remains strong, and retirements have stayed low, largely helped by their youthful successor\u2019s weak durability.\u00a0 Calio noted that the V2500 is not nearing the end of its useful economic life. \u201cThat is still a relatively young fleet. A number have not had their first shop visit or their second shop visit at this point.\u201d<\/p>\n The Jurassic PW4000 is further along that curve. Calio described it as exactly where P&W would expect to be at this point in its lifecycle, with the company now managing its decline rather than chasing growth. Even so, he expects the fleet to remain a meaningful contributor to the aftermarket for several more years.<\/p>\n V2500-A5 cutaway<\/p>\n NGSA: stabilization before innovation<\/p>\n Farnborough International Airshow is traditionally where propulsion players preview the next products. P&W is sounding considerably less eager to rush toward propulsion for Airbus\u2019 Next Generation Single Aisle aircraft, or NGSA.<\/p>\n P&W finds itself in a somewhat different posture from GE Aerospace\u2019s RISE and Rolls-Royce\u2019s UltraFan. \u201cI know coming out of these airshows, it\u2019s the right forum to be thinking about sort of what\u2019s next, and maybe the shiny new toys that are out there,\u201d Calio said. He seems to be talking a similar line as Boeing, which still suffers from a 737 Max hangover: \u201cI will just tell you that our focus today is on execution. The industry needs stability. Our customers want and need stability, and the supply chain needs and wants stability.\u201d<\/p>\n Whenever the NGSA does arrive, P&W wants to change the economics of building its engine. Calio questioned the traditional model in which an engine maker spends heavily developing a new powerplant, earns relatively little on the engines installed on new aircraft, and then waits decades for four-to-six shop visits over a roughly 25-year service life to earn its return.<\/p>\n Collins sets sights on old margin heights<\/p>\n RTX subsidiary Collins Aerospace is growing again across virtually every channel. Now RTX wants its avionics, seats, and aviation equivalent of the Swiss Army Knife supplier to turn growth into higher margins.<\/p>\n Second quarter sales were $8.2 billion, up 8% on an adjusted basis. Commercial original equipment sales sprang higher by 26% on higher narrowbody and widebody volumes, while aftermarket sales rose 10%, including 11% growth in parts and repair and another 11% from modifications and upgrades.<\/p>\n Collins recently signed a five-year agreement with Air New Zealand covering MRO services for engine nacelles across the airline\u2019s entire Boeing 787 fleet, adding to a business benefiting from more out-of-warranty flight hours and a growing installed base.<\/p>\n RTX raised its Collins outlook, with organic sales now expected to grow in the high single-digit to low-double-digit range. Operating profit is forecast to increase by $550 million to $625 million over 2025, up from the previous $425 million to $525 million range.<\/p>\n But margins are the thing. Collins is running at roughly a 17% return on sales despite tariff pressure, and Mitchill sees a path back toward the 19% to 20% margins Collins pulled in the past.<\/p>\n Getting there won\u2019t come from volume alone. RTX expects about 60% of the second-half profit step-up to come from higher sales, with the remaining 40% coming from cost reductions\u2014what they call \u201cself-help.\u201d\u00a0 Collins is consolidating operations, shifting more hours to lower-cost locations and attacking layers of overhead.<\/p>\n Even with the acquisition by RTX dating back to 2018, Calio admits \u201csome of that integration really hadn\u2019t been done yet.\u201d But they promise investment during the first half, and will begin appearing in the second half and build over the next several years. \u201cThere are real structural tailwinds to this business based upon its portfolio composition and the content that it has,\u201d Calio said.<\/p>\n Image from: RTX Q2 2026 Investor Presentation<\/p>\n Money matters<\/p>\n RTX turned its strong sales quarter into stronger profits. Operating profit jumped 31% to $2.81 billion, with overall operating margin reaching 11.4%. The free cash flow spigot opened further to $2.88 billion.<\/p>\n P&W also put more of its growth on the bottom line. Adjusted operating profit rose 22% to $740 million, with the operating margin reaching 8.3% despite the costs and unfavorable mix associated with ramping up GTF production.<\/p>\n Collins is making progress on its aforementioned margin climb. Adjusted operating profit increased 10% to $1.37 billion.<\/p>\n<\/a><\/p>\n<\/a><\/p>\n<\/a><\/p>\n