Raytheon Technologies’ commercial aerospace businesses continued to struggle in the third quarter of 2020, though the company’s Collins Aerospace unit did swing to an operating profit.
But Raytheon’s Pratt & Whitney engine business posted a $615 million operating loss in the third quarter, down from a $520 million profit in the same period of 2019.
The coronavirus pandemic has particularly slammed engine makers’ aftermarket businesses, the result of airlines grounding older jets.
P&W’s sales slipped 34% year on year, to $3.5 billion in the third quarter. Adjusted commercial aftermarket sales plummeted 51% year on year, while adjusted sales of new products declined 30%.
“The decrease in commercial sales was primarily due to a significant reduction in shop visits and related spare part sales and commercial engine deliveries principally driven by the current environment,” Raytheon says.
P&W’s adjusted military sales bumped up 11% year on year in the third quarter.
Raytheon subsidiary Collins Aerospace did manage to turn a $526 million operating profit in the third quarter, down 58% year on year. Collins’ adjusted aftermarket sales sank 52% year on year, while adjusted commercial new-product sales declined 44%.
Partly insulated by its military and space businesses, Raytheon earned a $264 million profit in the third quarter, down about 77% year on year. But huge losses over the preceding quarters leave the company with a $3.7 billion loss for the first nine months of 2020.
Massachusetts-based Raytheon Technologies, formed this year by the merger of Raytheon and United Technologies, has cut some 15,000 employees in recent months, trimming its P&W and Collins workforces by some 20%.
In response to the pandemic, Raytheon set out this year to reduce its costs by $2 billion and retain another $4 billion via “cash actions” – measures aimed at stemming cash outflows via methods such as burning down inventory.
To date, the company has “achieved approximately $700 million of cost-reduction and $1.9 billion of cash-conservation actions, which was significantly better than our plan”, chief executive Greg Hayes says. “The long-term business fundamentals and earnings power of Raytheon Technologies remain strong.”