More shop visits for parts and repairs and rising jet engine manufacturing powered a 16% increase in second-quarter sales at Pratt & Whitney, its parent company, Raytheon Technologies Corp., said Tuesday.
By several measures, airline travel is gaining momentum after being flattened by COVID-19. But Raytheon’s two defense businesses face labor shortages and supply chain problems, Chief Executive Officer Greg Hayes told industry analysts on a conference call.
Revenue passenger miles — the number of miles traveled by passengers — in the second quarter globally were nearly 70% of pre-pandemic levels, he said. And the number of passengers who move through Transportation Security Administration checkpoints is at 90% of where it was in 2019, Hayes said. In addition, international revenue passenger miles are expected to increase to 75% to 80% of 2019 levels by the end of the year.
Pratt & Whitney posted revenue of $4.97 billion in the April-June period, nearly $700 million more than in the second quarter of 2021. It’s the fifth consecutive quarter of double-digit revenue growth as the airline industry puts behind it the global travel restrictions that grounded most fleets during the pandemic.
Raytheon is optimistic about Pratt & Whitney for the remainder of 2022. It raised its outlook for operating profit to an increase of $550 million to $650 million this year over 2021 from a previous outlook of an increase of between $500 million and $600 million.
Collins Aerospace, Raytheon’s other commercial aviation business, posted a 10% rise in second-quarter sales, to $5 billion, as aviation emerges from the steep decline brought on by the pandemic.
Raytheon, the Arlington, Virginia-based aerospace and defense conglomerate, reported second-quarter sales of $16.3 billion, up 3% from the same three-month period last year. It missed Wall Street estimates of $16.44 billion, according to analysts surveyed by Zacks Investment Research.
Earnings per share of $1.16 were up 13% and beat analysts’ estimates of $1.12.
Raytheon shares tumbled 3.4% in afternoon trading, to $91.34 as markets fell broadly in response to Walmart’s reduction of its profit outlook, citing inflation.
Hayes warned of significant labor shortages, particularly at Raytheon’s two defense businesses. Raytheon expected at the beginning of the year to hire 2,000 engineers, including those to replace workers who quit or retire, for a total of more than 5,000 who are needed, he said.
“And we are struggling on that regard as well,” he said.
“I think the only thing that’s going to solve labor availability, I hate to say this, is a slowdown in the economy,” Hayes said. “Because right now there just simply aren’t enough people in the workforce for all of our suppliers.”
Hayes also detailed supply chain problems, also affecting Raytheon’s defense businesses. Raytheon expects parts on its factory floors to be available 90% to 95% of the time. In the second quarter supply chain constraints reduced that to 50%, he said.
“So you can imagine the amount of re-work, the lost productivity in our shops as we are starting things that are not complete, going back, doing rework,” he said.
The Raytheon Missiles and Defense business posted second quarter sales of $3.56 billion, down 11% over the second quarter of 2021. And second-quarter sales of $3.57 billion at the Raytheon Intelligence & Space unit was down 6% from the April-to-June quarter last year, due primarily to a business divestiture.
