Yahoo Finance RTX Secures US Navy Contract to Aid F135 Propulsion System
RTX Corporation’s RTX business unit, Pratt & Whitney, recently secured a modification contract involving the F135 propulsion system. The Naval Air Systems Command, Patuxent River, MD, has awarded the deal.
Valued at $59.3 million, the contract is scheduled to be completed by December 2025. Per the terms of this deal, RTX Corp. will procure Lot 16 advanced long-lead-time hardware in support of Lot 18 F135 propulsion systems equipped in F-35 Lighting II Joint Strike Fighter aircraft.
The work related to the deal will be carried out at multiple locations across the nation.
What’s Favoring RTX?
Pratt & Whitney enjoys a considerable order inflow for military jet engines, buoyed by its in-depth expertise in manufacturing the same. The business unit has been manufacturing and sustaining the F135 engine for the U.S. government’s F-35 Joint Program to power the single-engine F-35 Lightning II aircraft produced by Lockheed MartinLMT.
F135 propulsion system configurations are used for the U.S. Air Force’s F-35A, the U.S. Marine Corps’ F-35B and the U.S. Navy’s F-35C jets. F135 engines are also used in F-35 aircraft purchased by Joint Strike Fighter partner countries and other countries through foreign military sales arrangements.
The strong demand for F35 has indeed been beneficial for Pratt & Whitney as it has led to a steady stream of orders for F135 engines. Lockheed Martin has successfully delivered 944 F-35 airplanes since the program's inception as of Jun 30, 2023. This underscores the concurrent demand for the F135 engine, which is the power source for this advanced stealth fighter jet.
Going forward, LMT anticipates F-35 delivery numbers in the band of 147-153 jets per year in 2023 and 2024. Lockheed Martin also expects to supply nearly 156 jets in 2025 and beyond. This ensures a steady flow of F135 engine production and sustainment orders for RTXCorp., like the latest one. This should bolster RTX’s revenues from the Pratt & Whitney business unit.
Growth Prospects
As nations continue to prioritize bolstering their defense capabilities, in the days ahead, we can expect to see a growing commitment to investing in advanced fighter jets.
Per the reports from Expert Market Research, the global military aircraft market is expected to witness a CAGR of 5.1% from 2023 to 2028. This stands to benefit RTX as it enjoys an established position in designing and manufacturing powerful engines for prominent fighter aircraft. Other defense contractors that are likely to benefit from the growth opportunities offered by the aforementioned market are as follows:
Boeing BA: The company is a prominent jet maker and enjoys a dominant position in the combat aircraft market. Its expertise lies in a wide variety of defense aircraft and jet components, repair and modification-related programs. Its military aircraft include C-17 Globemaster III, P-8A Poseidon, V-22 Osprey, etc.
Boeing has a long-term earnings growth rate of 4%. Its investors have gained 41.9% in the past year.
Airbus Group EADSY: Its military aircraft consist of the A400M, the C295 tactical transporter, the new-generation A330 Multi Role Tanker Transport and the Eurofighter, the most advanced swing-role fighter ever conceived.
Airbus’ long-term earnings growth rate is pegged at 12.4%. Shares of EADSY have returned 36.4% value to its investors in the past year.
Price Movement
In the past three months, shares of RTX Corp. have decreased 9.1% compared with the industry’s decline of 1%.
Image Source: Zacks Investment Research
Zacks Rank
RTX Corp. currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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