Back to top

Image: Bigstock

Raytheon's (RTX) Arm Signs a Deal With LATAM for GTF Engines

Read MoreHide Full Article

Raytheon Technologies Corp.’s (RTX - Free Report) arm, Pratt & Whitney, recently clinched a deal with the LATAM Airlines Group of South America for supplying GTF engines. The deal involves powering 146 Airbus (EADSY - Free Report) A320neo aircraft, thereby enhancing the initial deal signed in 2013 for powering 42 A320neo jets.

RTX also signed a long-term EngineWise Comprehensive service agreement with the airlines for providing engine maintenance services. This highlights the consistent flow of revenue streams from LATAM.

Importance of GTF Engines

A focus on sustainability in the aviation industry is likely to increase manifold. In the days ahead, airlines may invest in more fuel-efficient aircraft, explore alternative fuels and implement eco-friendly practices to reduce carbon emissions and become more eco-friendly.

In such a scenario, Pratt & Whitney’s GTF engine may play a significant role in sustainability benefits as it is considered to be more environmental in its class, delivering the lowest fuel consumption and CO2 emissions for single-aisle aircraft and nearly half the noise footprint.

Such remarkable features fuel the demand for the engine. GTF engines have gained notable traction in the aviation industry and currently power more than 1,400 aircraft across 64 airlines and three aircraft platforms — Airbus A320neo family, Airbus A220 and Embraer E-Jets E2.

In 2022, the engine was also chosen by Cessna SkyCourier, Daher Kodiak 900 and TBM960. Such a strong customer base highlights the capability and reliability the engine offers to its customers.

Going forward, RTX’s continuous investment strategy to upgrade the engine to match the changing dynamics of the aviation world and provide cutting-edge technology along with cost efficiency may continue to enhance GTF's position as the leader in fuel efficiency and CO2 emissions and result in new order wins.

Another Aircraft Platform That Uses GTF Engines

The benefits of low operating costs, reduced fuel consumption and a reduction in the carbon footprint have been boosting the demand for GTF engines. Apart from Airbus, GTF engines are equipped in Embraer’s (ERJ - Free Report) aircraft.

Embraer’s E2 family of aircraft, considered to be eco-friendly, is powered by RTX’s GTF engine. E2 jets enjoy strong demand due to their fuel efficiency, and less carbon and noise footprint.

As of Mar 31, 2023, Embraer’s E-Jets E2 had 281 orders in the backlog. Considering the valued demand for its E-jets family of aircraft, the company may continue to witness the solid delivery of these jets in the coming quarters as well, highlighting the strong demand for GTF engines.

Price Movement

In the past month, shares of Raytheon Technologies have increased 1.9% against the industry’s fall of 0.7%.

Zacks Investment Research
Image Source: Zacks Investment Research

Zacks Rank & a Stock to Consider

Raytheon Technologies currently carries a Zacks Rank #3 (Hold). One better-ranked stock in the same industry is Curtiss-Wright (CW - Free Report) , which carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for Curtiss-Wright’s 2023 sales suggests a growth rate of 5.5% from the prior-year reported figure. The consensus estimate for its 2023 earnings implies a growth rate of 8.5% from the prior-year reported figure.

The Zacks Consensus Estimate for Curtiss-Wright’s 2024 sales calls for a growth rate of 5.5% from the prior-year reported figure. The Zacks Consensus Estimate for its 2024 earnings indicates a growth rate of 7.5% from the prior-year reported figure.

Published in