Key insights
- S&P Global Ratings upgraded RTX to 'A-' from 'BBB+' due to strong aerospace and defense demand and successful debt reduction. The agency cited RTX's disciplined deleveraging, projecting debt to EBITDA below 2.5x and funds from operations to debt above 30%. The upgrade reflects robust operational momentum, with significant backlogs in both commercial aerospace and defense segments, supporting projected free operating cash flow of over $9 billion this year.
Investing.com -- S&P Global Ratings upgraded Rtx Corp's (NYSE: RTX) issuer and unsecured issue-level credit ratings to ‘A-’ from ‘BBB+’ on Friday, citing robust aerospace and defense demand alongside steady balance-sheet repair. The agency assigned a stable outlook and affirmed RTX’s ‘A-2’ short-term rating, projecting that the company will keep adjusted debt to EBITDA below 2.5x and funds from operations to debt above 30%.
The upgrade underscores RTX’s disciplined deleveraging following its $10 billion debt-funded accelerated share repurchase in late 2023. Management remains on track to pay down the remaining $2.9 billion tied to that buyback, having honored a pledge to pause share repurchases until the debt is retired. S&P estimates RTX will generate more than $9 billion in free operating cash flow this year, a substantial cushion against roughly $30 billion in adjusted debt, with further cash flow expansion expected in 2027.
Operational momentum across both core segments continues to bolster the company's credit profile. In commercial aerospace, persistent aircraft undersupply and multi-year manufacturer backlogs provide clear revenue visibility for RTX’s Collins Aerospace unit and Pratt & Whitney subsidiary, which supplies engines for roughly 40% of new Airbus A320 family jets. Even if high fuel costs and ticket prices tied to the extended conflict with Iran temper broader air travel growth, S&P noted that massive equipment and maintenance backlogs should insulate airframer demand.
Meanwhile, heightened global security risks are driving substantial order intake across RTX’s defense portfolio, which accounts for roughly half of total revenue. Framework agreements with the Pentagon to expand production of key munitions, including Tomahawk, AMRAAM, and Standard Missile interceptors, helped lift Raytheon’s backlog to $130 billion and its rolling 12-month book-to-bill ratio to 2.9x. Although increased capital expenditures will be required to scale output two- to fourfold over the coming years, S&P Global Ratings expects favorable contract structures to soften the near-term impact on free cash flow.
Progress in resolving the July 2023 manufacturing defect in Pratt & Whitney’s PW1100 geared turbofan (GTF) engines has also eased a major operational overhang. RTX is more than halfway through its inspection and repair program, lifting GTF service output by 30% over the past year and reducing grounded aircraft by 25% since the end of 2025. S&P estimates only $200 million of the original $2.8 billion in airline customer compensation remains unpaid, signaling diminishing financial risk from repair delays as engine production gradually shifts back toward new deliveries.
Looking ahead, S&P expects RTX to maintain roughly $3.7 billion in annual dividends while exercising near-term restraint on buybacks amid heightened U.S. government scrutiny of defense industry capital returns. The rating agency indicated that a further upgrade is possible over the next 12 to 24 months if RTX sustains leverage comfortably below 2.0x and funds from operations to debt above 45%, though aggressive debt-funded buybacks or renewed supply chain bottlenecks could pressure the rating.
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