By Pratyush Thakur and Mike Stone
(Reuters) – RTX reported better-than-expected quarterly earnings on Tuesday, as strong performance at its Collins Aerospace business offset the hit it took due to a major quality crisis at engine making unit Pratt and Whitney.
The company also said it has approved a $10 billion share repurchase program that would be funded through short and long-term debt.
Shares of the aerospace major were up 8.1% before the bell.
In July, RTX disclosed it had found microscopic containments in powdered metal, used to manufacture high-pressure turbine discs that are part of the engine’s core, the presence of which could lead to cracks in the engine.
RTX had at the time said 200 engines would require “accelerated inspection” with 60 days to fix each engine with a contamination issue. However, two months later, it expanded the scope of inspections and said it would need to pull up to 700 engines off aircraft for lengthy quality inspections.
“We do not expect any significant future incremental impact as a result of these fleet management plans,” RTX CEO Greg Hayes said on Tuesday.
Pratt and Whitney, a subsidiary of RTX, booked a $2.48 billion operating loss in the reported quarter related to engine recalls and compensations to airlines. But profit at its unit Collins Aerospace, which deals with commercial aftermarket service, rose 22% to $903 million.
RTX reported an overall third-quarter adjusted profit of $1.25 per share, beating Wall Street estimates of $1.21, according to LSEG data.
Adjusted revenue rose 12% to $18.95 billion, ahead of analysts expectations of $18.59 billion.
The Arlington, Virginia-based company also entered into an agreement to sell its Cybersecurity, Intelligence and Services business within its Raytheon segment for around $1.3 billion.
(Reporting by Pratyush Thakur in Bengaluru; Editing by Krishna Chandra Eluri)
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