Raytheon sees castings shortages spilling into next year amid aftermarket demand
U.S. aerospace giant Raytheon Technologies Corp (RTX.N) said on Tuesday stability in supply of castings, used in making engines, may only happen well into next year after a strong recovery in aftermarket sales put further pressure on a battered supply chain.
“I think we expect that (castings supply) to take the rest of this year and into probably through most of next year to stabilize and get back kind of to the levels where we need to see it,” Raytheon finance chief Neil Mitchill said.
Raytheon, a supplier to planemakers Boeing Co (BA.N) and Airbus SE (AIR.PA), is working with vendors to find alternative ways to test and qualify materials and help them get parts out of their doors faster, Mitchill said at a Baird conference.
Supply shortages have crippled aerospace’s ability to meet a snapback in demand for travel. The supply of castings has been singled out as problematic by aerospace executives as manufacturing them is a labor-intensive process and it takes time to train new hires.
Shortages are now prompting Raytheon to choose between making new engines and servicing old ones.
“We are continuing to support our OE (original equipment) customers as well as making the appropriate trade-offs between our aftermarket needs and delivering for new aircraft,” Mitchill added.
TRAVEL DEMAND A ‘WATCH ITEM’
Raytheon, whose Pratt & Whitney engines power all of Airbus’ A220 jets and about half of the A320neo aircraft, said it had not seen any signs of travel demand, which has turbocharged the industry’s recovery, subsiding.
“There is so much pent-up demand, and we’re just not seeing any signals yet in our business that it’s going to slow down,” Mitchill said, mirroring comments made by major U.S. airlines in recent weeks.
However, he added travel demand remains a “watch item”, amid recessionary fears.
Shares of Raytheon were down about 1%.