Moody’s alters RTX outlook to negative

Moody’s Investors Service said it revised its outlook for RTX Corp. to negative from stable and affirmed its Baa1 ratings.

“The change in outlook to negative follows the company's announcement on Oct. 24, 2023, that it will execute a $10 billion accelerated share repurchase (ASR) program, which will be funded entirely with new debt. The company is quadrupling down on annual share repurchases in 2023, in response to the roughly 30% decline in its share price since July 24, 2023,” Moody’s said in a press release.

On the second-quarter earnings call, the company disclosed that about 1,200 Pratt & Whitney PW1100G geared-turbo-fan engines would require accelerated inspections. This disclosure was followed on Sept. 11 that announced about 1,800 more engines need accelerated inspections.

RTX booked a $5.4 billion charge in the third quarter to cover related costs, mainly customer compensation, which will be incurred because of the accelerated inspections.

“Defects in powder metal manufactured by an RTX subsidiary and used in the manufacturing of turbine discs in GTF engines is the latest challenge for Pratt & Whitney's GTF engine program. The suspect powder metal increases risk of disc cracking, which could lead to in-flight engine failures. The suspect powder metal was manufactured between Q4 2015 and Q3 2021. Moody's believes discs with potentially contaminated powder were manufactured during and after this period,” the agency said in a statement.

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