MTU Aero Engines Faces 1 Billion Euro Hit Due to RTX's Engine Recall

MTU Aero Engines, a German aircraft-engine manufacturer, is bracing for a financial setback of around 1 billion euros ($1.07 billion) this year. The reason behind this blow is RTX's decision to recall several Pratt & Whitney jet engines for inspection due to a flaw in the metal that may result in cracking.

In a statement released on Monday, MTU Aero Engines acknowledged that this recall will impact both its revenue and earnings before interest and taxes for the current year. However, the majority of the liquidity impact is expected to be felt between 2024 and 2026.

To mitigate the potential consequences, MTU Aero Engines stated its intention to implement necessary measures. The company plays a critical role in supplying essential components for Pratt's geared-turbofan engines, which power various aircraft models like Airbus's A320neo.

RTX, previously known as Raytheon Technologies, indicated that approximately 600 to 700 engines will need to be removed for inspection due to the aforementioned issue.

As a result of this announcement, MTU shares experienced a decline of 7.5% at EUR192.30 as of 1315 GMT.