RTX Corporation has revealed that its Pratt & Whitney unit has landed a significant $355 million deal for F100 engine performance-based logistics (PBL) by South Korea’s Defense Acquisition Program Administration (“DAPA”). The contract stipulates the third consecutive PBL contract that Pratt & Whitney and DAPA have signed, signifying a decade-long alliance to enhance the Republic of Korea Air Force’s F-15 Eagles and F-16 Fighting Falcons fleet readiness. The sustainment work related to the contract began in December 2023 and will continue through the latter half of 2027.
The Significance of F100 Engine
Pratt & Whitney’s F100 engine is a widely trusted and experienced propulsion solution worldwide. It delivers superior capability with industry-leading safety, reliability, and performance to the global fleet of F-15s and F-16s. With its low cost per flight hour and lowest life cycle costs, it provides excellent value to its customers. The F100 engines have been powering the F-15 for over 50 years and with the incorporation of 5th generation technology, there are more than 3,800 F100 engines in 23 air forces globally. Such notable contract wins are indicative of the solid revenue generation prospects RTX has in the expanding military jet market.
Growth Opportunities for RTX
The increasing geopolitical disputes worldwide have prompted nations across the globe to significantly secure their borders, thereby leading them to invest heftily in defense. Demand for advanced military jets along with technologically developed equipment like jet engines is burgeoning. Consequently, the growth prospects for combat jet engines remain solid. The Dataintelo firm projects the global military aircraft engines market to witness a CAGR of 5.27% during the 2024–2032 period. This should benefit RTX’s Pratt & Whitney, which boasts a strong demand in the military aircraft engine market. Notably, Pratt & Whitney ended 2023 with a backlog of $838 million for F135 sustainment and $443 million for F119 sustainment. More than 7,000 Pratt & Whitney military engines are in service with 34 armed forces worldwide. Pratt & Whitney is also expanding its global presence with the recent establishment of its new India Digital Capability Center in Bengaluru, India.
Peer Moves
Defense contractors likely to benefit from the growth opportunities offered by the military aircraft engine market include Safran, Rolls-Royce, and MTU Aero Engines. These companies are well-positioned to capitalize on the expanding global defense market.
Price Performance
Over the past six months, shares of RTX have gained 7.8%, outpacing the industry’s 1.2% decline.
Zacks Rank
RTX currently has a Zacks Rank #3 (Hold).
