Manufacturing defects in key products such as the 737 MAX and GTF engines have led to third-quarter losses for RTX, Boeing (NYSE:BA), and Spirit. The RTX subsidiary, Pratt & Whitney, is preparing for a $3 billion charge this quarter due to the replacement of contaminated components in nearly 700 GTF engines. Concurrently, Boeing and Spirit are dealing with issues related to misdrilled holes on the 737 MAX.
Rob Stallard of Vertical Research Partners anticipates losses per share of 24 cents for RTX, $2.23 for Boeing, and $1.03 for Spirit. He referred to these firms as the sector's "problem children". Ron Epstein from Bank of America (NYSE:BAC) warned about potential repair delays and increased customer compensations.
Investors are closely monitoring Boeing's projected free cash flow of $3-$5 billion by 2023. However, this target may be jeopardized if the company fails to meet its delivery target of 400 737s this year.
Spirit's interim CEO Patrick Shanahan, known for his problem-solving abilities, has been given the responsibility of improving Spirit's financial health and increasing production efficiency. Michel Merluzeau from AIR consultancy group underscored the grave situation at Spirit.
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