Raytheon Technologies Corp (RTX.N) raised its forecast for full-year adjusted profit on Tuesday, as rising commercial air travel boosted demand for the aerospace and defense firm’s engines, spare parts and aftermarket services.
But in an interview with CNBC Raytheon’s Chief Executive Greg Hayes warned the U.S. aerospace and defense firm will lose “several thousand” employees after they refused COVID-19 vaccinations. Separately, Hayes, in a post-earnings conference call with analysts, said he expects U.S. President Joe Biden’s vaccine mandate to cause “some disruption” in the supply chain.
Shares fell about 1.5% in early trading.
Recovering demand for air travel with the holiday season on the horizon has helped drive demand for Raytheon’s aircraft cabin interiors and engines as the U.S. government’s decision to open its borders to vaccinated individuals from abroad points to a recovery of the wide-body aerojet aftermarket, Raytheon Chief Financial Officer Neil Mitchill said.
While the company faces supply chain challenges among its 13,000 suppliers, Mitchill said “it comes down to some very acute issues” with labor shortages having some impact.
“We’re seeing some shortfalls in electronic components, connectors, things like that. We’re not as exposed like the auto industry is to the chips,” Mitchill said.
The pandemic has crippled many companies’ ability to send and receive the parts and supplies they need to produce a wide range of products, creating shortages, reducing inventories and hammering profits.
Raytheon, whose Pratt and Whitney unit supplies aircraft engines to companies like Boeing Co (BA.N)and Airbus SE (AIR.PA), said it expects 2021 adjusted profit per share to be between $4.10 to $4.20, up from its prior forecast of $3.85 to $4.00 per share.
Hayes told Wall Street analysts that while he welcomed the commercial market rebound, he was “skeptical” that the production rate of Boeing 737s would reach 50 per month, or that Airbus A320s would reach 75 per month. Adding that Raytheon’s “5-year plans do not anticipate getting to that kind of rate by 2024 or 2025.”
The maker of Tomahawk missiles reported that net income rose to $1.39 billion, or 93 cents per share, in the third quarter ended Sept. 30 from $264 million, or 17 cents per share, a year earlier.
Raytheon’s quarterly revenue rose 9.9% to $16.21 billion.