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February 7, 2024

SEC subpoenas RTX in probe of Pratt & Whitney engine issues

By David Krechevsky

RTX Corp. said this week it has received subpoenas from the Securities and Exchange Commission (SEC) as part of an investigation into the company’s disclosures last year of problems related to the use of powder metal in manufacturing some engine parts.

RTX disclosed receiving the subpoenas in its 2023 annual report filed Monday with the SEC. According to the filing, RTX, parent of aircraft engine manufacturer Pratt & Whitney, received the subpoenas from the SEC on Nov. 7, 2023, and on Jan. 30, 2024. 

The subpoenas seek “engineering, operational, organizational, accounting, and financial documents” related to the disclosures in 2023 “of issues arising from Pratt & Whitney’s use of powder metal in manufacturing various engine parts, its identification of certain risks associated with those manufacturing processes, and corrective actions identified by Pratt & Whitney to mitigate those risks,” the filing states.

RTX states that it is cooperating with the SEC and is “responding to the subpoenas.” It adds that, “at this time, we are unable to predict the timing or outcome of this SEC investigation.”

Pratt & Whitney disclosed in July that several parts for its PW1100G-JM geared turbofan engines were manufactured with contaminated metal powder that makes the parts more susceptible to corrosion and cracks. 

The issue required hundreds of planes with the engines to be grounded for inspections. RTX also reported a decrease in other net sales of $5.4 billion in 2023 from a year earlier, primarily due to what it calls the “powder metal matter.”

RTX also states in the filing that it “may not meet customer requirements” due to delays in production, maintenance, repair, and overhaul caused by the investigation, as well as the possibility that “any other engine models are found to be materially impacted by the powder metal issue.” It adds that the result could “result in material additional costs, including liquidated damages or other liabilities.”

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