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Pratt & Whitney Parent Company Faces New Lawsuit Over Engine Production Issues That Caused Share Price to Tumble

Pratt & Whitney Parent Company Faces New Lawsuit Over Engine Production Issues That Caused Share Price to Tumble

a man in a yellow vest standing next to a large airplane

The parent company of aircraft engine manufacturer Pratt & Whitney is facing a new shareholder lawsuit over a major production defect issue that affects hundreds of engines which are already in service.

The problem is connected to some of Pratt & Whitney’s geared turbofan engines that power many of the latest generation of Airbus A320neo series aircraft, as well as Airbus A220 planes and the Embraer E2 Family.

Pratt & Whitney discovered that there was an issue with powdered metal used in the manufacture of these engines for a period stretching from the end of 2015 through to mid-2021, which could cause cracking in the stage 1 and stage 2 disks in the high-pressure turbine.

The issue means that some engines will be subjected to more regular inspections than first thought, while others will need to be completely pulled from service for more detailed inspections way ahead of the normal maintenance schedule.

Airlines will initially have to pay the additional inspection and maintenance costs, although claims will eventually be made against Pratt and its parent company RTX. The company has already set aside billions of dollars to cover the cost of the scandal.

Shareholder Portia McCollum, however, claims the RTX board of directors failed to mention the quality control issues in several financial releases and instead issued materially false and misleading statements about its geared turbofan engines (GTF).

In 2021 and 2022, RTX filed annual reports in which it promoted the benefits of its GTF engines but failed to mention the fact that the company had identified a significant manufacturing issue with these engines.

It wasn’t until July that Pratt publicly admitted that at least 1,200 engines would be subject to early inspections due to the risk of micro-cracks, which could lead to the temporary grounding of around 600 Airbus jets through 2024.

Shares in RTX took an immediate hit in the aftermath of the public disclosure.

McCollum is bringing the case against RTX’s board of directors, claiming the board should have known about the issues but approved 10-K filings, which failed to mention the problem.

The case was filed in a Connecticut district court earlier this week under case number: 3:23-cv-01414

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