Pratt & Whitney (P&W) continues to face challenges due to shortages of cast metallic parts and other components, which are hindering its ability to produce new engines and ramp up maintenance work for its PW1000G geared turbofans. These issues have been exacerbated by the ongoing recall of PW1000G engines, impacting a large portion of the global fleet.
During RTX’s second-quarter earnings call on July 25, 2024, chief executive Christopher Calio highlighted the ongoing shortages in “structural castings” and other critical components. Despite a 5% increase in the output of these parts from the first to the second quarters, the production levels remain insufficient to meet the demands of new-engine deliveries, spare engines, and necessary maintenance work. However, there was a silver lining as the availability of some forged engine components nearly doubled year on year in the second quarter.
These shortages reflect broader supply chain troubles affecting the aerospace industry. For example, CFM International reported delivering only 297 Leap turbofans in the second quarter, a 29% year-on-year decrease, partly due to similar supply chain issues.
Impact on Engine Deliveries and Operations
Despite the challenges, P&W managed to increase its engine deliveries in the second quarter, handing over 236 large commercial aircraft engines, including PW1000Gs. This marked a 24% year-on-year increase. P&W’s second-quarter operating profit more than doubled to $542 million, with sales rising 19% to $6.8 billion.
P&W is working to boost production while dealing with massive recalls of its PW1000G engines for inspections and replacement of potentially defective parts. The recalls are due to a manufacturing issue involving powdered metal, affecting high-pressure turbine and compressor disks, compressor hubs, and air seals.
Global Fleet Disruptions
The ongoing issues have led to significant disruptions for airlines worldwide. As of July 25, 2024, 653 PW1000G-powered aircraft were in storage, accounting for about 31% of the global fleet. This includes 555 A320neo-family aircraft, which represents 34% of that fleet, 78 A220s with PW1500Gs (22% of that fleet), and 20 Embraer E-Jet E2s with PW1900Gs (15%). While not all these aircraft are grounded due to the recall, a substantial number are affected by these issues.
This situation has remained relatively stable over the past few months. As of April 1, 2024, 637 PW1000G-powered aircraft were grounded. Calio mentioned that the number of aircraft on the ground has leveled out and remains in line with expectations. By the end of the second quarter, P&W had inspected over 6,000 powder-metal parts across all programs, with a fallout rate below 1%.
The recall and compensation efforts have had a significant financial impact on RTX, the parent company of P&W. As of June 2024, RTX reported $2.6 billion in liabilities related to customer compensations, down from $2.8 billion at the end of 2023. P&W’s liabilities account for 51% of this total, with the remainder attributed to other partners in International Aero Engines, including Japan Aero Engines and MTU Aero Engines.
P&W has indicated that the recall will result in an average of 350 A320neo-family jets being out of service at any given time between 2024 and 2026.
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