Aerospace and Military Contractors Lift 2026 Profit Forecasts on Strong Demand
Strong Demand Drives Record Backlogs and Upward Profit Revisions
By Rajesh Kumar Singh, Aatreyee Dasgupta and Mike Stone
Oct 20 (Reuters) - Northrop Grumman and RTX raised their annual profit forecasts on Tuesday, helped by robust demand from military programs that pushed their backlogs to record levels.
Sustained demand for commercial aerospace services also fueled growth, both at RTX and rival engine maker GE Aerospace, which lifted its full-year forecast for a second time this year.
Northrop shares jumped by 7.2% in early trading and RTX gained 2.4% while GE Aerospace lost 4.9% on lower than expected implied fourth-quarter earnings.
Geopolitical Factors and Military Spending
Heightened Tensions Support Defense Contractors
GEOPOLITICAL BACKDROP BRINGS SUSTAINED MILITARY SPENDING
The results add to strong performances among US aerospace and defense contractors, supported by airline maintenance spending, growing demand for aircraft engines and parts and sustained military spending at a time of heightened geopolitical tensions around the globe.
Key Military Programs Fuel Growth
Sales at RTX's Raytheon climbed 14%, driven by higher volume in naval programs and land and air defense systems, including Patriot, Standard Missile and Tomahawk.
"We continue to see robust global demand for all of our products and services," RTX finance chief Neil Mitchill told Reuters on Tuesday, adding that the company had "another record backlog" of $340 billion, up 36% from a year ago.
Northrop, which makes the B-21 Raider bomber and parts for F-35 fighter jets, registered a similar 14% sales increase at its Aeronautics Systems unit, which benefited from increased B-21 sales and higher F-35 production.
Contract Wins and Backlog Expansion
The company secured $16.4 billion in new contracts during the quarter, with its orders growing at 1.5 times its billings, driven by strong demand across programs including Sentinel, the F-35, Virginia-class submarines and certain classified programs.
Northrop's backlog rose to a record $109.6 billion by September 30. Similarly, RTX chalked up $81 billion in new commercial and defense awards, pushing its backlog to a record $340 billion.
Commercial Aerospace Demand Remains Robust
Airline Maintenance and Engine Sales
Beyond the military sphere, RTX was helped by airline maintenance spending and growing demand for its Pratt & Whitney aircraft engines and parts even as surging fuel costs squeeze airline profits.
GE Aerospace registered similarly firm demand, with revenue at its commercial engines and services business rising more than a fifth to $10.34 billion.
Risks from High Fuel Prices
It acknowledged, however, that prolonged high fuel prices could lead airlines to reduce flying, weakening demand for engine repairs, spare parts and spare engines.
Upward Revisions to Profit and Sales Forecasts
Northrop, RTX, and GE Aerospace Raise Guidance
Northrop now expects full-year 2026 adjusted profit per share in the range of $29.35 to $29.75, up from a previous forecast of between $28.60 and $29.10.
RTX now forecasts 2026 adjusted earnings per share of $7.65 to $7.75, up from its previous projection of $7.10 to $7.25. It also raised its sales forecast range to between $97 billion and $97.5 billion, from $95 billion to $96 billion.
GE Aerospace now expects adjusted earnings of $8.00 to $8.10 per share in 2026, up from its previous forecast of $7.65 to $7.85 and above analyst expectations of $7.92, according to data compiled by LSEG.
(Reporting by Aatreyee Dasgupta, Shivansh Tiwary, Rajesh Kumar Sing and Mike StoneWriting by Christian PlumbEditing by Leroy Leo and David Goodman)
