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RTX tumbles after disclosing jet-engine problem

A Pratt & Whitney PW1000G turbofan engine is installed on the wing of an Airbus A320neo aircraft during a delivery ceremony outside the Airbus SE plant in Hamburg, Germany, Friday, February 12, 2016.

Bloomberg | Christian Sorry

shares RTX Shares fell 13% on Tuesday after the aerospace giant said manufacturing problems with some of its popular engines required “expedited” inspections of about 200 aircraft engines.

RTX, the parent company of aircraft engine maker Pratt & Whitney, said on its quarterly earnings call that the problem stems from metal powders used to make some engine parts. Engines currently in production are not affected, the company said.

RTX, formerly known as Raytheon Technologies, cut its cash flow outlook for the year by $500 million to $4.3 billion because of the issue.

“It’s going to be expensive,” RTX CEO Greg Hayes said on the company’s earnings call. “We’re going to make the airline whole because of the disruption we’ve caused to the airline.”

The problem is the latest challenge for airlines as they try to reap the rewards of the travel boom with a limited number of planes available, in addition to being late for manufacturer planes.

Pratt & Whitney said it expects to need to remove about 1,000 more engines from airline fleets over the next nine to 12 months. However, the company said it would continue to deliver new aircraft and parts.

The problem will affect some A320neo, a narrow-body jet that is one of the world’s most with Boeing Max 737

The FAA said it was aware of the issue and was in contact with Pratt & Whitney and the airlines affected by the issue

“The agency will ensure that appropriate actions are taken,” the FAA said.

Delta AirlinesAirbus’ main customer said it was investigating the issue. Airbus had no immediate comment. A JetBlue Airways The airline is “working with Pratt to assess the impact on our fleet,” the spokesman said.

At the same time, the stock General ElectricThe rival engine maker rose more than 6 percent on Tuesday after the group raised its revenue and cash flow forecasts for the year, in part due to strong demand for jet engines.

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