The 1 Thing Investors in GE Aerospace and RTX Need to Know Before Buying Stock (And Why Airplanes Are Set to Look Dramatically Different in the Future)

GE Aerospace's (NYSE: GE) joint venture, CFM International, and RTX's (NYSE: RTX) Pratt & Whitney produce rival engines in the Airbus A320neo. In addition, the CFM engine, LEAP, is the sole engine option on the Boeing 737 MAX. Together, these two narrowbody aircraft are the workhorses of the sky. It's difficult for ordinary travelers to tell the aircraft apart, and even harder to distinguish the engines on the Airbus A320neo. However, that's all set to change in the future, because the CFM engine in development, RISE, could revolutionize the aerospace industry.Aircraft engines are a hugely essential factor in the industry. Both GE Aerospace and RTX's Pratt & Whitney rely on the same business model. They spend billions on researching and developing aircraft engines, selling them to airlines at a loss, but generating lucrative aftermarket revenue over decades. It creates an unusual dynamic where selling more engines (good) generates near-term losses, but adds significant long-term value to GE and RTX.As such, engine manufacturers must be a certified engine supplier on a new aircraft program. In addition, they must demonstrate efficacy and reliability on airplanes to compete for engine orders, as is currently the case on the Airbus A320neo family of airplanes.Continue readingWeiter zum vollständigen Artikel bei MotleyFool Weiter zum vollständigen Artikel bei MotleyFool