Melrose Flags Hit From RTX Engines Recall, Joining Others in Aerospace Sector — At a Glance

Melrose Industries on Tuesday became the latest company in Europe's aerospace sector to say it would be hurt by Pratt & Whitney's engine recall. The recall, announced Monday by Pratt & Whitney parent RTX, affects up to 700 engines that must be inspected over the next three years due to an issue that can cause cracks.

Here is a list of companies that reported on the potential impact from the recall:

--Melrose expects a potential cash hit of around 200 million pounds ($250.2 million) stemming from the Pratt & Whitney engine recalls, but is backing its previous guidance, it said Tuesday.

Melrose said its GKN Aerospace division had a 4% program share on the engine variant affected by the issue. Financial assumptions for all its risk and revenue sharing partner programs are conservative and recognize that most of its work is done on the delivery of GKN parts which typically last the life of the engine, it said.

-- Deutsche Lufthansa said it is currently analyzing and evaluating the situation.

--Airbus said it doesn't expect any impact on 2023 deliveries nor on its 2024 ramp-up plan and remains in dialog with Pratt & Whitney and its customers about the situation.

"We will remain in close contact with P&W to assess any potential impact in the longer-term, based on the outcomes of the ongoing inspections," a spokesman told Dow Jones Newswires.

--MTU Aero Engines is expecting a hit of around 1 billion euros ($1.07 billion) this year from the recall, it said Monday.

The German aircraft-engine manufacturer said the recall would affect revenue and earnings before interest and taxes this year, though the lion's share of the liquidity impact is expected between 2024 and 2026.

The group will host a call Wednesday at 1400 GMT to provide an update on the issue, it said.

MTU has lost more than EUR2 billion in market capitalization since RTX identified the issue, Warburg Research analyst Christian Cohrs wrote in a note to clients.

--Wizz Air Holdings expects capacity to be hurt and aircraft to be grounded following the recall, and will seek financial compensation from Pratt & Whitney, it said Monday.

The budget carrier said it is assessing the implications to understand the extent of the impact on its fleet. Initial estimates indicate a 10% potential reduction in capacity for the second half of the year ending March 2024, it said.

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(END) Dow Jones Newswires

September 12, 2023 07:10 ET (11:10 GMT)

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