Supply Chain Matters updates readers on breaking news related to commercial aircraft engine producer Pratt & Whitney’s GTF aircraft engine flaws that are subject to added inspections and repairs.
Background
In early August we alerted Supply Chain Matters, and specifically our commercial aircraft industry readers, of an issue of engine component reliability issues concerning engine supplier Pratt & Whitney’s geared turbo fan (GTF) engines.
This development involved in-service Pratt GTF engines that would have to be inspected after the discovery of evidence of contamination in some of the metal used in the production of certain engine parts. Reportedly, the metal contamination can lead to cracks within engine parts.
The issue was especially prevalent for engines operating in hotter climates such as the Middle East and parts of Asia. The suspected flaw requires that engines be internally inspected to assess if repairs are needed, and to what extent. According to business and industry media reports at the time, the engine recall would affect upwards of 1,200 engines produced between 2015 and 2021.
Upwards of 40 percent of the Airbus A320 neo family of aircraft are powered by the GTF engine produced by both RTX and Germany based MTU Aero Engines. The remainder of the Airbus operating fleet is powered by CFM International LEAP engines. Engine selection is done by airline customers themselves.
Both Airbus and Pratt indicated that the engine issue did not pose an immediate safety issue for the aircraft while both companies were reaching out to global wide airline customers operating these engines to help minimize any disruption to global-wide airline fleets.
Newest and More Concerning Development
Raytheon Technologies (RTX Corp.), the parent of Pratt announced yesterday that the component issue and the potential of flawed engines is now much broader in scope, involving as much as 3,000 in-service engines, and reportedly all of which now need to be inspected. That scope involves nearly the majority of the 3,200 GTF engines that are installed globally.
The issue reportedly involves powdered metal utilized to produce certain engine parts which is leading to premature failures.
Consequently, a plan is being developed for removal, inspection, or repair of these engines over a three year period. According to a published report from Bloomberg, RTX executives now indicate that an estimated average of upwards of 350 aircraft will need to be parked annually, through the year 2026, to complete this process of engine removal, inspection. Repair and remount. The figure is further expected to peak to roughly 650 aircraft parked in the first half of next year.
RTX CEO Greg Hayes acknowledged a rather difficult and disappointing industry situation and that a laser focus effort is underway to address this challenge “in the most expeditious and financially sound way forward.”
From our lens, that acknowledgement translates to a large scale and expensive disruption. The supplier further announced that it will take an approximate $3 billion pretax charge in its fiscal third quarter to both address the flawed parts and to provide compensation to impacted airlines. According to the Bloomberg report, pretax operating profit for RTX will be reduced by as much as $3.5 billion over the next several years because of this issue.
The Wall Street Journal reported that the engine inspection and repair effort would ultimately cost up to $7 billion. News of this added development caused the price of the company’s stock to fall upwards of 6 percent.
Reportedly, Airbus has indicated that its monthly A320 family aircraft production and delivery plan for this year will not be impacted by this latest issue. Our sense is that this will have to be revisited given the need for a stock of needed spare engines for airlines that demand them.
Industry Implications
As noted in our prior industry focused commentaries, once again, the weakest link in commercial aircraft supply networks remains one of the most dependent aspects, that being the timely delivery and installation of the aircraft’s engines. The other critical link is the timely delivery and consistent quality of aircraft fuselage components. Boeing continues to have its challenges with supplier Spirit AeroSystems regarding quality lapses and added rework fixes that are impacting monthly production schedules as well as global airline customers in potential inspection and rework needs.
The irony of this is that the design of more technology laden and fuel-efficient engines was the prime catalyst that has fueled the current wave of airline demand for these aircraft. Yet, the rework costs alone for the Pratt GTF will likely surpass the original engine development cost.
The takeaway for commercial industry supply networks and industry players is that when considering the designs of the next generation of aircraft engines and composite material structures, it is a balancing of technology innovation and design for supply chain with overall operational reliability.
As the saying goes, the devil is always in the details, and in the case for this industry, the product design and quality control tradeoffs.
Yet again, added industry disruption that originates in component supply networks.
Bob Ferrari
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