RTX boosts 2024 forecast again on demand for aircraft repairs, defense systems

By Pratyush Thakur and Mike Stone

(Reuters) -RTX on Tuesday raised its 2024 adjusted profit and sales forecasts for the second time, citing strong demand for aircraft repairs and defense systems, and reported better-than-expected quarterly earnings.

Shares of the Arlington, Virginia-based company were up 2.1% before the opening bell.

The aerospace and defense giant expects full-year adjusted profit per share to be between $5.50 and $5.58, compared with its prior forecast range of $5.35 to $5.45.

The company raised its revenue forecast range to $79.25 billion to $79.75 billion, from $78.75 to $79.5 billion.

With a surge in air travel demand, airlines had to extend the service life of aircraft amid the limited availability of new commercial planes, creating a bustling aftermarket business.

Chief Financial Officer Neil Mitchill told Reuters in an interview that a labor strike at U.S. planemaker Boeing (NYSE:) Co had meant slower deliveries in the quarter, but “We are looking forward to Boeing ramping up that strike situation and then we do expect to resume deliveries later in the year.”

Mitchill said “all eyes” were on the strikers’ vote on a new contract this week.

RTX reported a third-quarter per-share profit of $1.45, beating estimates of $1.34, as per LSEG data. Adjusted sales rose 6% to $20.1 billion, above expectation $19.85 billion.

RTX unit Pratt & Whitney, which competes with CFM International to supply jet engines for Airbus’ A320neo family of aircraft, posted a third-quarter operating profit $557 million, compared to a year-ago loss, on demand for repairs.

The business is navigating an ongoing inspection drive to check for flawed components such as high-pressure turbine disks and high-pressure compressor disks, that could result in micro-cracks and fatigue in its geared turbofan (GTF) jet engines. This has led to grounding for hundreds of aircraft in recent months.

CFO Mitchill told Reuters the company has finalized compensation negotiations with 28 of just over 40 customers in the impacted fleet of jets. Finalizing negotiations with about 80% to customers in that fleet means RTX lowers its risk and puts the issue behind them.

RTX’s Collins Aerospace business, which provides defense products such as test and training range systems and crew escape systems, posted an 18% rise in operating profit to $1.06 billion.

Collins also cited strong demand for aircraft component repairs in the quarter through September.

RTX’s other main business, Raytheon (NYSE:), one of the United States government’s biggest defense contractors, also reported a higher profit, citing demand for products such as Patriot missile-defense systems.

Tensions in the Middle East and the South China sea, as well as the Ukraine war, have prompted investors pile money into shares of defense majors such as RTX and Lockheed Martin (NYSE:) on anticipation of higher demand for weapons.