# Melrose notes RTX news on their Pratt & Whitney GTF fleet

- Link: https://www.directorstalkinterviews.com/melrose-notes-rtx-news-on-their-pratt-whitney-gtf-fleet/4121127079
- Published: 2023-09-12T08:09:05+01:00
- Author: Emily Johnson

**[Melrose Industries plc](https://www.directorstalkinterviews.com/ftse-company/melrose-industries/mro.l)**(
LON:MRO) has noted that RTX announced yesterday an update on their Pratt & Whitney
GTF fleet arising from the previously disclosed rare condition in powder metal used
to manufacture certain of their engine parts. This added further specificity, both
for the market and for GTF programme partners, regarding the potential operational
and financial impacts.

GKN Aerospace has a 4% programme share on the GTF PW1100G variant impacted by this
issue.  According to RTX’s announcement, the full potential cash impact to Melrose
spread over the period to 2026 could be in the range of c.£200 million, if it was
assumed that this is all a programme cost.

Melrose’s financial assumptions for all its RRSP programmes are conservative recognising
that most of our work is done on the delivery of GKN parts which typically last 
the life of the engine, whilst appropriately allowing for risks to arise over the
full programme duration.  As a result, there is no change to our profit and balance
sheet guidance, and the share buyback programme announced last week, starting in
October this year, will proceed as planned whilst staying comfortably within previously
stated leverage levels.

Melrose Industries owns an exceptionally good Aerospace Engines business which can
deliver over 30% operating margins post 2025, including contribution from a diverse
portfolio of 19 RRSP engines contracts.  This will be highlighted at the recently
announced Engines Investor Event in October this year in Sweden, which will give
further detail on the full quality of the business.

> **Simon Peckham, Chief Executive of Melrose Industries PLC, said:**
> “RTX indicated to us and the market yesterday that the GTF rare parts issue is
> within the scope they outlined previously and the cash impact is now assumed to
> be spread over a longer-term.  We confirm our confidence in achieving the previous
> profit and balance sheet guidance and look forward to commencing our share buyback
> programme in October.”

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