✦ The Next Narrowbody Engine, Pushed RightThin moat

RTX (RTX) — the future bets

RTX expects the next narrowbody aircraft to keep slipping, and its own research spending has fallen from 4.1% to 3.2% of sales while it waits.

The next single-aisle aircraft is the engine contest Pratt & Whitney most needs to win back, and it is not on the calendar yet. On the second-quarter 2026 call Calio said "NGSA [Next-Generation Single Aisle] is going to continue to move to the right because the industry needs stability"1. A later launch gives Pratt & Whitney time to restore the GTF's standing before the next competition.

Research and development, 2025 ($M)2,807Company-funded4,886Customer-fundedRTX Form 10-K FY2025
Customers fund more research than RTX does.

It also leaves the economics open. Calio suggested the next engine's business model may need to "smooth out some of those cash flows"2 rather than depend on decades of aftermarket, which is how the GTF was sold.

Meanwhile RTX's own research budget is falling relative to sales. Company-funded research and development was $2,807 million in 2025, 3.2% of net sales, against $2,805 million and 4.1% in 20233. Customer-funded research was larger, at $4,886 million4. Pratt & Whitney's segment spent $1,034 million5.

A company that expects the next contest to be years away can spend less now. It risks arriving with less.

RTX is investing in the technologies the next engine may need through smaller programmes. Collins is developing electrical power architectures, composite materials and high-efficiency cooling systems6, and Pratt & Whitney Canada is leading a hybrid-electric regional engine project7. None of them is a narrowbody engine, but each builds knowledge that one would use.

Company-funded research and development as a share of sales is the measure. At 3.2% in 20258, a further decline while a new narrowbody programme is formally launched would mean RTX intends to compete on the GTF's derivatives rather than a new engine.

Moat trajectory: Holding steady

Company-funded R&D flat in dollars, falling as a share.

The number that tests this moat
Reported
Company-funded R&D as a share of sales, full year
3.2% (2025), from 4.1% in 2023

Investment in the next generation; a further fall into a new programme launch would mean RTX is competing on derivatives.

Source: RTX Form 10-K FY2025, financial statements ↗
References
  1. ReportedOn the second-quarter 2026 call Calio said "NGSA [Next-Generation Single Aisle] is going to continue to move to the right because the industry needs stability".
    RTX second-quarter 2026 earnings call transcript (The Motley Fool) - Raytheon bookings and book-to-bill, GTF aircraft-on-ground and MRO output, munitions output, framework agreements, the defence budget request, GTF Advantage, Collins margin plans and segment outlook - commercial: GTF fleet, maintenance output, aftermarket, orders, Collins and the outlook. — Q2 2026 · publ. 24 July 2026 · source ↗
  2. ReportedCalio suggested the next engine's business model may need to "smooth out some of those cash flows" rather than depend on decades of aftermarket, which is how the GTF was sold.
    RTX second-quarter 2026 earnings call transcript (The Motley Fool) - Raytheon bookings and book-to-bill, GTF aircraft-on-ground and MRO output, munitions output, framework agreements, the defence budget request, GTF Advantage, Collins margin plans and segment outlook - commercial: GTF fleet, maintenance output, aftermarket, orders, Collins and the outlook. — Q2 2026 · publ. 24 July 2026 · source ↗
  3. ReportedCompany-funded research and development was $2,807 million in 2025, 3.2% of net sales, against $2,805 million and 4.1% in 2023.
    RTX Form 10-K for fiscal 2025 - consolidated financial statements and notes: income statement, cash flow, dividends and repurchases, long-term debt of $37,700 million, goodwill by segment, pension income, the 2024 resolution of certain legal matters, the Raytheon contract termination and the accelerated share repurchase. — FY2023-FY2025 · publ. 6 February 2026 · source ↗
  4. ReportedCustomer-funded research was larger, at $4,886 million.
    RTX Form 10-K for fiscal 2025 - consolidated financial statements and notes: income statement, cash flow, dividends and repurchases, long-term debt of $37,700 million, goodwill by segment, pension income, the 2024 resolution of certain legal matters, the Raytheon contract termination and the accelerated share repurchase. — FY2023-FY2025 · publ. 6 February 2026 · source ↗
  5. ReportedPratt & Whitney's segment spent $1,034 million.
    RTX Form 10-K for fiscal 2025 - Item 7 segment review and Note 20: net sales and operating profit by segment for 2023-2025, organic sales drivers (commercial aftermarket, OEM, military), sales by customer type, products and services, segment assets, capital expenditure and research and development - Pratt & Whitney: segment sales, operating profit, organic drivers, customer types, assets and capital expenditure. — FY2023-FY2025 · publ. 6 February 2026 · source ↗
  6. ReportedCollins is developing electrical power architectures, composite materials and high-efficiency cooling systems, and Pratt & Whitney Canada is leading a hybrid-electric regional engine project.
    RTX Form 10-K for fiscal 2025 - Item 1 business: the three segments and their products, the GTF family powering more than 2,600 aircraft for over 90 operators, the F135 as sole-source engine on all F-35 variants, GTF Advantage certification, the IAE collaboration shares, employees (about 180,000 in 52 countries, 69% in the U.S.) and the divested businesses. — FY2025 · publ. 6 February 2026 · source ↗
  7. ReportedCollins is developing electrical power architectures, composite materials and high-efficiency cooling systems, and Pratt & Whitney Canada is leading a hybrid-electric regional engine project.
    RTX Form 10-K for fiscal 2025 - Item 1 business: the three segments and their products, the GTF family powering more than 2,600 aircraft for over 90 operators, the F135 as sole-source engine on all F-35 variants, GTF Advantage certification, the IAE collaboration shares, employees (about 180,000 in 52 countries, 69% in the U.S.) and the divested businesses. — FY2025 · publ. 6 February 2026 · source ↗
  8. ReportedAt 3.2% in 2025, a further decline while a new narrowbody programme is formally launched would mean RTX intends to compete on the GTF's derivatives rather than a new engine.
    RTX Form 10-K for fiscal 2025 - consolidated financial statements and notes: income statement, cash flow, dividends and repurchases, long-term debt of $37,700 million, goodwill by segment, pension income, the 2024 resolution of certain legal matters, the Raytheon contract termination and the accelerated share repurchase. — FY2023-FY2025 · publ. 6 February 2026 · source ↗
Sources
Generated September 28, 2026