⚠ The Powder-Metal Recall: $5.4 Billion of Sales ReversedModerate threat

RTX (RTX) — threat to the moat

A flaw in powder metal cost RTX $5.4 billion of sales and $2.9 billion of operating profit in one quarter, and the last of the compensation is still being paid.

In July 2023 Pratt & Whitney found "a rare condition in powder metal" used in certain parts of the PW1100G-JM geared turbofan, requiring accelerated inspection of the fleet1. In September it said about 600 to 700 engines would be removed for shop visits between 2023 and 20262. It is the single largest event in RTX's recent history.

Powder-metal compensation accrual ($bn)2.8Created 20231.7Dec 20240.7Dec 20250.4Jun 2026RTX Form 10-K FY2025 and Form 10-Q Q2 2026
Six-sevenths of it paid.

The bill came in one quarter. RTX reduced its third-quarter 2023 net sales by $5.4 billion, mostly compensation owed to airlines for grounded aircraft, and took a $2.9 billion operating profit charge at Pratt & Whitney's net 51% program share, with partners bearing $2.5 billion3. Pratt & Whitney's 2023 operating result swung to a loss of $1,455 million from a profit of $1,075 million in 202245, and RTX's net income fell to $3,195 million6.

The cash came later. RTX created a $2.8 billion accrual for customer compensation7. It stood at $1.7 billion at the end of 2024, $0.7 billion at the end of 2025 and $0.4 billion in June 2026, after $1.0 billion was used in each of 2024 and 202589. About $150 million was paid in the second quarter of 202610.

The operational recovery is under way. Aircraft on the ground fell 25% in the first half of 2026 and maintenance output rose more than 40%11, but groundings are expected to stay elevated through the end of 202612.

The damage beyond the cash is harder to measure. The filing says the matter "has caused reputational harm"13, and it warns of possible "durability issues" in other in-service GTF engines14.

The share of Pratt & Whitney's sales going to Airbus shows the recall's shape from another angle. It was 48% in 2023, 31% in 2024 and 29% in 202515, partly because the 2023 sales reduction removed other revenue that year, and partly because aftermarket work, much of it recall-driven, grew faster than new engines. The GTF is still the most important engine RTX sells; it is also the one with the most work left to clear.

The size of the programme is best seen against the fleet. The 600 to 700 engines to be removed between 2023 and 202616 came from a family that powered more than 1,700 aircraft when RTX published its 2023 annual report17. The original estimate of the operating profit impact was $3 billion to $3.5 billion over several years after partners' share18; the charge actually booked was $2.9 billion19, and management told investors in July 2026 that its "financial and technical outlook remains on track"20.

The recall is almost paid for. The remaining accrual is the number to watch; it should reach zero in 2026, and any increase, or a new inspection programme on another GTF model, would reopen the wound.

The number that tests this threat
Reported
Powder-metal customer-compensation accrual remaining, latest quarter
$0.4bn (June 2026), from $2.8bn created in 2023

What is left of the bill; any increase or a new inspection programme would reopen it.

Source: RTX Form 10-Q, Q2 2026 ↗
References
  1. ReportedIn July 2023 Pratt & Whitney found "a rare condition in powder metal" used in certain parts of the PW1100G-JM geared turbofan, requiring accelerated inspection of the fleet.
    RTX Form 10-K for fiscal 2025 - the Powder Metal Matter: the July 2023 finding, the third-quarter 2023 charge ($5.4 billion of net sales, $2.9 billion of operating profit at Pratt & Whitney's net 51% program share, partners' 49% share), customer-compensation accruals of $1.7 billion at the end of 2024 and $0.7 billion at the end of 2025, $1.0 billion used in each of 2024 and 2025, and elevated aircraft on ground levels through the end of 2026. — FY2023-FY2025 · publ. 6 February 2026 · source ↗
  2. ReportedIn September it said about 600 to 700 engines would be removed for shop visits between 2023 and 2026.
    RTX Form 8-K exhibit 99.1 of 11 September 2023, GTF fleet update - 600 to 700 engines to be removed for shop visits between 2023 and 2026, a $3 billion to $3.5 billion operating profit impact after partners' share, and the capital-return commitment. — September 2023 · publ. 11 September 2023 · source ↗
  3. ReportedRTX reduced its third-quarter 2023 net sales by $5.4 billion, mostly compensation owed to airlines for grounded aircraft, and took a $2.9 billion operating profit charge at Pratt & Whitney's net 51% program share, with partners bearing $2.5 billion.
    RTX Form 10-K for fiscal 2025 - the Powder Metal Matter: the July 2023 finding, the third-quarter 2023 charge ($5.4 billion of net sales, $2.9 billion of operating profit at Pratt & Whitney's net 51% program share, partners' 49% share), customer-compensation accruals of $1.7 billion at the end of 2024 and $0.7 billion at the end of 2025, $1.0 billion used in each of 2024 and 2025, and elevated aircraft on ground levels through the end of 2026. — FY2023-FY2025 · publ. 6 February 2026 · source ↗
  4. ReportedPratt & Whitney's 2023 operating result swung to a loss of $1,455 million from a profit of $1,075 million in 2022, and RTX's net income fell to $3,195 million.
    RTX Form 10-K for fiscal 2023 - the three-segment recast of 2021-2022, the GTF family powering more than 1,700 aircraft for 70 operators, backlog of $196 billion, the Carrier and Otis separation and Chinese sanctions on Raytheon Missiles & Defense. — FY2023 · publ. February 2024 · source ↗
  5. ReportedPratt & Whitney's 2023 operating result swung to a loss of $1,455 million from a profit of $1,075 million in 2022, and RTX's net income fell to $3,195 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. ReportedPratt & Whitney's 2023 operating result swung to a loss of $1,455 million from a profit of $1,075 million in 2022, and RTX's net income fell to $3,195 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 ↗
  7. ReportedRTX created a $2.8 billion accrual for customer compensation.
    RTX Form 10-K for fiscal 2025 - the Powder Metal Matter: the July 2023 finding, the third-quarter 2023 charge ($5.4 billion of net sales, $2.9 billion of operating profit at Pratt & Whitney's net 51% program share, partners' 49% share), customer-compensation accruals of $1.7 billion at the end of 2024 and $0.7 billion at the end of 2025, $1.0 billion used in each of 2024 and 2025, and elevated aircraft on ground levels through the end of 2026. — FY2023-FY2025 · publ. 6 February 2026 · source ↗
  8. ReportedIt stood at $1.7 billion at the end of 2024, $0.7 billion at the end of 2025 and $0.4 billion in June 2026, after $1.0 billion was used in each of 2024 and 2025.
    RTX Form 10-K for fiscal 2025 - the Powder Metal Matter: the July 2023 finding, the third-quarter 2023 charge ($5.4 billion of net sales, $2.9 billion of operating profit at Pratt & Whitney's net 51% program share, partners' 49% share), customer-compensation accruals of $1.7 billion at the end of 2024 and $0.7 billion at the end of 2025, $1.0 billion used in each of 2024 and 2025, and elevated aircraft on ground levels through the end of 2026. — FY2023-FY2025 · publ. 6 February 2026 · source ↗
  9. ReportedIt stood at $1.7 billion at the end of 2024, $0.7 billion at the end of 2025 and $0.4 billion in June 2026, after $1.0 billion was used in each of 2024 and 2025.
    RTX Form 10-Q for the quarter ended 30 June 2026 - backlog of $289 billion ($170 billion commercial, $119 billion defence), remaining performance obligations, the $0.4 billion powder-metal accrual, the Blue Canyon Technologies sale, Patriot awards and the remaining repurchase authority. — Q2 2026 · publ. 23 July 2026 · source ↗
  10. ReportedAbout $150 million was paid in the second quarter of 2026.
    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 ↗
  11. ReportedAircraft on the ground fell 25% in the first half of 2026 and maintenance output rose more than 40%, but groundings are expected to stay elevated through the end of 2026.
    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 ↗
  12. ReportedAircraft on the ground fell 25% in the first half of 2026 and maintenance output rose more than 40%, but groundings are expected to stay elevated through the end of 2026.
    RTX Form 10-K for fiscal 2025 - the Powder Metal Matter: the July 2023 finding, the third-quarter 2023 charge ($5.4 billion of net sales, $2.9 billion of operating profit at Pratt & Whitney's net 51% program share, partners' 49% share), customer-compensation accruals of $1.7 billion at the end of 2024 and $0.7 billion at the end of 2025, $1.0 billion used in each of 2024 and 2025, and elevated aircraft on ground levels through the end of 2026. — FY2023-FY2025 · publ. 6 February 2026 · source ↗
  13. ReportedThe filing says the matter "has caused reputational harm", and it warns of possible "durability issues" in other in-service GTF engines.
    RTX Form 10-K for fiscal 2025 - Item 1A risk factors: competition on price, delivery and technology; customers buying parts from suppliers other than the original equipment manufacturer; discounts and guarantees to win engine positions; new defence entrants; GTF durability; reputational harm; pension sensitivity to the discount rate; tariffs. — FY2025 · publ. 6 February 2026 · source ↗
  14. ReportedThe filing says the matter "has caused reputational harm", and it warns of possible "durability issues" in other in-service GTF engines.
    RTX Form 10-K for fiscal 2025 - Item 1A risk factors: competition on price, delivery and technology; customers buying parts from suppliers other than the original equipment manufacturer; discounts and guarantees to win engine positions; new defence entrants; GTF durability; reputational harm; pension sensitivity to the discount rate; tariffs. — FY2025 · publ. 6 February 2026 · source ↗
  15. ReportedIt was 48% in 2023, 31% in 2024 and 29% in 2025, partly because the 2023 sales reduction removed other revenue that year, and partly because aftermarket work, much of it recall-driven, grew faster than new engines.
    RTX Form 10-K for fiscal 2025 - customers and backlog: sales to the U.S. government (38%, 40%, 46% of net sales in 2025-2023), Airbus (about 14%, 14%, 17% before discounts and incentives; 29%, 31%, 48% of Pratt & Whitney sales), Boeing and Airbus at 16% of Collins sales, international sales of 47%, and total, commercial and defence backlog with remaining performance obligations. — FY2023-FY2025 · publ. 6 February 2026 · source ↗
  16. ReportedThe 600 to 700 engines to be removed between 2023 and 2026 came from a family that powered more than 1,700 aircraft when RTX published its 2023 annual report.
    RTX Form 8-K exhibit 99.1 of 11 September 2023, GTF fleet update - 600 to 700 engines to be removed for shop visits between 2023 and 2026, a $3 billion to $3.5 billion operating profit impact after partners' share, and the capital-return commitment. — September 2023 · publ. 11 September 2023 · source ↗
  17. ReportedThe 600 to 700 engines to be removed between 2023 and 2026 came from a family that powered more than 1,700 aircraft when RTX published its 2023 annual report.
    RTX Form 10-K for fiscal 2023 - the three-segment recast of 2021-2022, the GTF family powering more than 1,700 aircraft for 70 operators, backlog of $196 billion, the Carrier and Otis separation and Chinese sanctions on Raytheon Missiles & Defense. — FY2023 · publ. February 2024 · source ↗
  18. ReportedThe original estimate of the operating profit impact was $3 billion to $3.5 billion over several years after partners' share; the charge actually booked was $2.9 billion, and management told investors in July 2026 that its "financial and technical outlook remains on track".
    RTX Form 8-K exhibit 99.1 of 11 September 2023, GTF fleet update - 600 to 700 engines to be removed for shop visits between 2023 and 2026, a $3 billion to $3.5 billion operating profit impact after partners' share, and the capital-return commitment. — September 2023 · publ. 11 September 2023 · source ↗
  19. ReportedThe original estimate of the operating profit impact was $3 billion to $3.5 billion over several years after partners' share; the charge actually booked was $2.9 billion, and management told investors in July 2026 that its "financial and technical outlook remains on track".
    RTX Form 10-K for fiscal 2025 - the Powder Metal Matter: the July 2023 finding, the third-quarter 2023 charge ($5.4 billion of net sales, $2.9 billion of operating profit at Pratt & Whitney's net 51% program share, partners' 49% share), customer-compensation accruals of $1.7 billion at the end of 2024 and $0.7 billion at the end of 2025, $1.0 billion used in each of 2024 and 2025, and elevated aircraft on ground levels through the end of 2026. — FY2023-FY2025 · publ. 6 February 2026 · source ↗
  20. ReportedThe original estimate of the operating profit impact was $3 billion to $3.5 billion over several years after partners' share; the charge actually booked was $2.9 billion, and management told investors in July 2026 that its "financial and technical outlook remains on track".
    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 ↗
Sources
Generated September 28, 2026