Lawsuit Filed Against RTX Following P&W Engine Inspection Announcement
Bernstein Liebhard, a United States (US)-based law firm, filed a lawsuit against RTX and is inviting investors to join in the class action motion that alleges that the company misled its investors about the state of the Pratt & Whitney Geared Turbofan (GTF) engine.
“Plaintiff alleges that Defendants made materially false and misleading statements throughout the Class Period,” the announcement read, adding that the defendants, namely RTX, failed to inform investors about the fact that the GTF engines were affected by a quality control issue at least since 2015. The quality control issue would require it to “recall and reinspect many of its GTF airplanes, affecting customers and harming its business”.
Following the news RTX’s share price fell by 10.2%, closing at $87,10 on July 25, 2023. On August 7, 2023, the company’s share price closed at $85,47, while the Year-to-Date (YTD) highest closing price was $104,66 on April 18, 2023.
The law firm invited investors, who purchased or acquired the shares or other securities of RTX between February 8, 2021, and July 25, 2023, to join the lawsuit no later than October 2, 2023.
Bernstein Liebhard announced its motion against RTX on August 8, 2023, the same day that it filed 12 other lawsuits against different corporations in the US.
RTX, the parent company of Pratt & Whitney, announced that the engine maker “has determined that a rare condition in powder metal used to manufacture certain engine parts will require accelerated fleet inspection” on July 25, 2023.
The inspections would affect the PW1100G engine, powering the Airbus A320neo aircraft family, with “accelerated removals and inspections within the next nine to twelve months”, which includes 200 accelerated inspections by mid-September 2023.
“The business is working to minimize operational impacts and support its customers,” RTX continued. The company pointed out that the financial impact of the inspections “is subject to a wide range of factors” and that it is “performing additional engineering analysis and fleet management planning that will further inform those factors which includes evaluating the timing and results of required inspections, workscope and impact on our customers”.
As such, the accelerated inspections of the PW1100G engines could affect RTX’s “cost estimates in our long-term contracts”, which could increase operating costs in the next few quarters or periods when the material impact is recognized in its financial filings.
According to ch-aviation.com data, out of the 1,333 Airbus A320neo family aircraft that have been delivered with the PW1100G engines, 210 are currently in storage or maintenance. Out of those aircraft, 10 were repossessed by lessors from airlines such as Russia’s S7 Airlines, Go First, and VietJet Air and are not currently operated by any airlines.