RTX

RTX builds two categories of hardware that both take decades to design and decades to retire. The first is defense equipment: guided interceptors, air-to-air missiles, radars, sensors and the command systems that connect them. The second is aircraft equipment: jet engines for military and commercial aircraft, plus avionics, landing gear, cabin systems and communications gear.

The company sells through three segments. Raytheon supplies missiles, air and missile defense systems and defense electronics, mostly to the U.S. government and allied governments. Pratt & Whitney designs and services large commercial engines, regional and business-jet engines, and the F135 engine that powers the F-35 fighter. Collins Aerospace supplies avionics, interiors, mission systems and power controls to airframers, airlines and defense customers.

A large share of revenue arrives after the initial sale. Engines and aircraft systems generate spare parts, repair and overhaul revenue for as long as the fleet flies, which is typically longer than the original production run. In the second quarter of 2026, Pratt & Whitney commercial aftermarket sales rose 25 percent and Collins commercial aftermarket sales rose 10 percent, both versus the prior year.

Raytheon - Air and Missile Defense

The Patriot air and missile defense system and its Guidance Enhanced Missile-Tactical (GEM-T) interceptor are the anchor program. Adjacent lines include the Standard Missile family for naval air and missile defense, the AIM-120 Advanced Medium-Range Air-to-Air Missile (AMRAAM), the National Advanced Surface-to-Air Missile System (NASAMS), StormBreaker precision munitions, and ground-based and shipborne radars. Raytheon second quarter 2026 sales were $8,269 million, up 18 percent year over year, driven by land and air defense systems, naval programs, and Patriot, Standard Missile and AMRAAM volume.

Pratt & Whitney - Propulsion

The GTF geared turbofan powers the Airbus A320neo family and the A220. The F135 engine powers all three F-35 variants and is undergoing the Engine Core Upgrade. Pratt & Whitney Canada supplies regional and business-aviation engines. Segment sales were $8,889 million in the second quarter of 2026, up 16 percent, with military sales up 23 percent on higher F135 volume and commercial aftermarket up 25 percent.

Collins Aerospace - Aircraft Systems

Collins supplies avionics, flight controls, actuation, landing systems, power and controls, interiors, and military communications and mission systems. Segment sales were $8,210 million in the second quarter of 2026, up 8 percent as reported and 13 percent organically after adjusting for divestitures completed in 2025, with commercial original-equipment sales up 26 percent.

Raytheon Company traces its history to Cambridge, Massachusetts in 1922 and became a major defense electronics and missile producer during and after the Second World War. The current SEC registrant, however, was incorporated in Delaware in 1934 as part of the United Technologies corporate lineage. United Technologies later assembled major aerospace businesses including Pratt & Whitney and, in 2018, Rockwell Collins.

In 2020, United Technologies spun off Otis and Carrier and merged its remaining aerospace businesses with Raytheon Company to form Raytheon Technologies. Sikorsky had already been sold to Lockheed Martin in 2015. The combined company adopted the RTX name in 2023 and organized itself under three segment brands: Collins Aerospace, Pratt & Whitney and Raytheon.

Two events since the merger continue to shape the company. The first is the powder-metal condition identified in certain Pratt & Whitney engine parts, which required accelerated removals and inspections across a significant portion of the PW1100G-JM geared turbofan fleet and remains a disclosed risk factor. The second is the legal and regulatory overhang from previously disclosed deferred prosecution agreements with the Department of Justice, a Securities and Exchange Commission administrative order, and a consent agreement with the Department of State, all of which RTX continues to list among its forward-looking-statement risk factors.

Leadership turned over in 2024 and 2025. Christopher T. Calio, previously president of Pratt & Whitney and then chief operating officer, became president and chief executive officer on May 2, 2024. Gregory J. Hayes, who led the merger, served as executive chairman and then stepped down; the board elected Calio chairman effective April 30, 2025.

Four drivers account for most of the current growth. First, air and missile defense replenishment: European and Middle Eastern governments are buying Patriot fire units and GEM-T interceptors, and the U.S. Army is placing urgent-need orders. Second, F135 volume, including the Engine Core Upgrade. Third, commercial aftermarket, where an aging and heavily utilized narrowbody fleet drives spare parts and shop visits at both Pratt & Whitney and Collins. Fourth, commercial original-equipment rates at Airbus and Boeing, which set Collins and Pratt delivery volumes.

Backlog gives some visibility into how long that lasts. RTX reported total backlog of $289 billion at June 30, 2026, up 22 percent year over year, split $170 billion commercial and $119 billion defense. Backlog is a contracted-work measure, not a revenue forecast, and converts to sales over multiple years subject to funding, production capacity and customer schedules.

Company guidance for full-year 2026, raised on July 23, 2026, is adjusted sales of $95.0 billion to $96.0 billion, organic sales growth of 8 to 9 percent, adjusted earnings per share of $7.10 to $7.25, and free cash flow of $8.50 billion to $8.75 billion. These are company projections and are subject to the forward-looking-statement cautions in the release.

National security implication. Patriot and GEM-T are now a strategic inventory question for the United States and its allies, not a procurement line item. The April 30, 2026 urgent-need modification, fully obligated with a five-month completion date, is the shape of an order placed to refill depleted stocks. The German-financed Ukraine contract and the Spanish fire-unit order show the same pattern in Europe. A single company's interceptor output rate is a meaningful input to allied air-defense readiness, which is both RTX's commercial advantage and a national concentration risk.

Capital implication. The variable that changed most in the second quarter of 2026 was cash. Free cash flow was $2.878 billion against negative $72 million in the same quarter of 2025, and the company raised its full-year free cash flow guidance to $8.50 billion to $8.75 billion. That improvement, if sustained, increases RTX's capacity for dividends, repurchases, debt reduction and reinvestment. The powder-metal disclosures in the most recent Form 10-K and Form 10-Q remain important context because fleet remediation has been a material source of cash-flow volatility.

What to watch next. Backlog conversion rate against reported sales; Pratt & Whitney segment margin, which at 8.3 percent remains materially below Collins at 16.7 percent and Raytheon at 12.6 percent; F135 Engine Core Upgrade milestones; Airbus and Boeing production rates; the closing of the Blue Canyon Technologies sale; and any change in the status of the disclosed deferred prosecution agreements.

The durable advantage is installed base plus qualification cost. Once an air force certifies a Patriot fire unit or an engine type, replacing it means requalifying the system, retraining crews, rebuilding the spares pool and rewriting sustainment contracts. That is a multi-year, multi-billion-dollar decision, so incumbents keep the sustainment revenue by default. The same logic applies to the F135, where RTX is the sole propulsion supplier for the F-35.

The second advantage is the aftermarket structure of the engine business. Original-equipment engine sales carry thin or negative margins; the return arrives across decades of shop visits and spare parts. A large delivered fleet is therefore an annuity, which is why Pratt & Whitney commercial aftermarket growth of 25 percent in the second quarter of 2026 matters more to earnings than the 8 percent decline in commercial original-equipment sales.

The moat has two visible limits. Interceptor production capacity is shared across the industrial base, so RTX can be demand-constrained by suppliers it does not own. And European customers increasingly require local co-production, as with the COMLOG facility in Germany, which transfers some manufacturing value out of RTX's own footprint in exchange for market access.

Program and technical risk. RTX continues to disclose the rare condition identified in powder metal used to manufacture certain Pratt & Whitney engine parts, which required accelerated removals and inspections across a significant portion of the PW1100G-JM geared turbofan fleet. The company's own risk language notes that other engine models may be affected.

Legal and regulatory risk. The company discloses deferred prosecution agreements with the Department of Justice, a Securities and Exchange Commission administrative order, related investigations, and a consent agreement with the Department of State. These carry ongoing compliance obligations and the possibility of further action.

Contract structure risk. Fixed-price development and production contracts transfer cost overruns to the contractor. Defense margin is also exposed to accounting-estimate revisions on long-duration programs, which RTX lists among its risk factors.

Customer and budget concentration. Demand depends on U.S. and allied defense appropriations and on commercial aircraft production rates at two airframers. Both are outside the company's control. Trade policy, tariffs and export-licensing decisions can also change the economics of international awards.

Supply chain. Interceptor and engine output is gated by suppliers of castings, forgings, energetics and microelectronics. Capacity expansion is capital-intensive and slower than order intake.