Pratt & Whitney’s recall of several hundred airplane engines continued to pummel stocks across the global engineering sector on Tuesday.
At the start of the week engine maker and Pratt & Whitney parent RTX
RTX,
said it would recall about 600 to 700 engines for inspection due to an issue related to the powdered metal used to make certain parts. The engines power the Airbus
AIR,
A320neo, and Pratt & Whitney is analyzing the impact of powder metal on other engine models within its fleet.
Inspections would take place over the next three years said RTX, formerly known as Raytheon, and it would take a $3 billion hit on profits in the third quarter. Shares in RTX, which lost nearly 8% on Monday, are off another 1.8% in premarket action Tuesday.
Shares in RTX’s jet engine partners have also been battered on the news as up to 350 aircraft are expected to be grounded between 2023 to 2026.
In Japan on Tuesday, shares in IHI Corp.
7013,
lost nearly 16%, Kawasaki Heavy Industries
7012,
fell nearly 6% lower and Mitsubishi Heavy Industries
7011,
shed 4%.
Frankfurt-listed shares of MTU Aero Engines
MTX,
shed more than 6% after the group said in a statement that it expects a €1 billion ($1.1 billion) impact on its earnings before interest and taxes this financial year.
In London, Melrose Industries
MRO,
said its GKN Aerospace division had a 4% program share on the engine variant affected by the issue and it expected a potential cash hit of around £200 million ($250.2 million). Melrose shares were a fraction firmer having tumbled 5% on Monday.
Read the full article here