A top executive of the parent company of jet engine maker Pratt & Whitney said Wednesday the company, buoyed by news of progress on a COVID-19 vaccine, sees a return by passengers to air travel.
Shares of Raytheon Technologies Corp. jumped nearly 11% Monday after Pfizer and partner BioNTech said their vaccine against COVID-19 was strongly effective and exceeded expectations. Indexes surged, with shares of other aviation companies also rising sharply. Boeing Co., for example, was up nearly 14% and General Electric Co. jumped about 8%.
"We're encouraged by the progress being made towards a safe and effective vaccine," Toby O'Brien, chief financial officer of Raytheon, said in an online discussion with an industry analyst. "We remain hopeful that a vaccine will be widely distributed, carving a path towards a return to public confidence and a normalization in air traffic."
Still, he repeated what Waltham, Massachusetts-based Raytheon has said previously: Passenger travel is not expected to return to pre-COVID-19 levels until 2023. In addition, O'Brien said maintenance and repair of jet engines — a big part of Pratt & Whitney's business — will lag by six to nine months.
"So I think that the answer is no, that our overall outlook and view hasn't changed," he said. "Obviously, a vaccine is a step in the process."
Raytheon sees a "gradual recovery" in its commercial aerospace businesses beginning in the current quarter, combined with an expected ramp-up at its Intelligence and Space and Missiles and Defense businesses, he said.
Plans to build a Pratt & Whitney advanced manufacturing plant for engine parts in Asheville, North Carolina, is "speaking to our confidence in the longer term" of aviation, O'Brien said.
Raytheon expects fourth-quarter sales of between $16.2 billion and $16.4 billion, in line with what Wall Street expects, according to Zacks Investment Research.
In addition, with $10 billion on hand as of Sept. 30, O'Brien said Raytheon has "got plenty of cash" and with the recovery that "has played out ... largely as we expected," the company will resume share buybacks next year.
The coronavirus is surging, a vaccine is at least months away and questions persist about how billions of does will be distributed globally. Still, O'Brien's upbeat tone contrasts with negative news of layoffs, furloughs and other financial hits beginning in April, just weeks after the company was formed from the merger of United Technologies Corp. and Raytheon Co.
