Strike ends at Pratt & Whitney, but some financial impact expected: RTX CEO
“There was an impact, of course, with the four-week stoppage on our ability to ship all the GTFs and F135s that was in our plan,” RTX CEO Chris Calio told investors.
Assembly line for the F-35 fighter’s F135 engine (Pratt & Whitney photo).
WASHINGTON—RTX’s Pratt & Whitney engine subsidiary has reached a contract deal with its union workforce, but the strike will make a dent on the company’s second quarter earnings, its CEO said today.
About 3,000 union workers for Pratt & Whitney facilities in Connecticut on Tuesday approved a four year contract, putting an end to a strike that had shaken up production of engines for military aircraft, including the F135 that powers Lockheed Martin’s F-35 Joint Strike Fighter.
During comments at Bernstein Strategic Decisions Conference, RTX CEO Chris Calio said the settlement with the union was “really good news,” noting that the machinists will return to work this week. However, cash flow in will be “break-even to negative” in the second quarter, although the company should be able to recover by year-end.
“There was an impact, of course, with the four-week stoppage, on our ability to ship all the GTFs and F135s that was in our plan,” Calio told investors, referencing the Geared Turbofan engine used in certain commercial airplanes.
“That’s something we’re going to have to recover throughout the balance of the year. There will be a cash impact here in the second quarter as a result,” he said. “We’re going to continue to get our people back, ramped up, get our engines back out the door.”
About 74 percent of members of locals 1746 and 700 of the International Association of Machinists and Aerospace Workers (IAM) voted to accept the new contract, which raises wages and includes a guarantee that the company will keep work at its East Hartford and Middletown plants through 2029, the union stated.
“Our committee worked tirelessly to ensure our members’ priorities were heard, and this agreement is a direct result of that determination,” Jeff Santini, IAM District 26’s directing business representative, said in a statement. “We are proud of what was achieved at the table and even prouder of the solidarity shown by our membership throughout this process.”
Pratt’s union workforce voted to strike on May 4. At the time, the company stated that it had “contingency plans in place to maintain operations and meet our customer commitments,” while employees told local news outlets that the company had brought in contract workers to replace union labor.
While the strike may cause some negative financial impact, the expected impact of incoming tariffs has softened, Calio said, due to the Trump administration’s 90-day pause on tariffs with China as well as other mitigating measures taken by RTX.
During a first-quarter earnings call in April, RTX executives projected an $850 million cost impact caused by the tariffs for 2025, with the impact spread between Pratt and Collins Aerospace — the company’s two divisions with major commercial aerospace activity.
“We feel a little bit better today than we did then on our earnings call about a month ago,” Calio told investors today, adding that RTX will update its expectations for tariff impact during its second quarter earnings call in July.
