The V2500 Still PaysNarrow moat

RTX (RTX) — moat facet

The V2500, out of production, still earns Pratt & Whitney aftermarket income through a partnership it leads with a 61% program share.

Pratt & Whitney's most dependable aftermarket is not the GTF. It is the V2500, the engine on the previous generation of A320 aircraft, sold through International Aero Engines. Pratt & Whitney holds a 61% program share interest in the IAE collaboration with MTU Aero Engines and Japanese Aero Engines Corporation, and a 49.5% ownership interest in IAE1.

International Aero Engines shares held by Pratt & WhitneyIAE (V2500) program share61%IAE ownership interest49.5%IAE LLC (PW1100G-JM) program share59%Net share after sub-collaborators, IAE / IAE LLC57% / 51%RTX Form 10-K FY2025, Note 15
Pratt leads both partnerships but keeps only about half.

A mature fleet is the best kind of installed base. Its engines have passed their early problems, its shop visits are predictable, and its owners have few alternatives for the parts inside it. Because the engine is out of production, every dollar it earns is aftermarket.

The arrangement also shows how the economics are shared. After considering sub-collaborators, Pratt & Whitney's net program share is 57% in IAE and 51% in the GTF company, IAE LLC2. And the V2500 still carries a legacy cost: flight-hour payments to Rolls-Royce, the former partner, which RTX says continue "through June 2027"3.

That date is worth noting. When the payments end, Pratt & Whitney keeps more of every V2500 flight hour, with no change in the fleet.

The contrast with the GTF explains the 2024 mix comment: older engines were earning more per overhaul than the new ones4. As V2500 aircraft retire, that income runs down, and the GTF has to take its place.

Pratt & Whitney's net share of the GTF programme, 51%5, is smaller than its net share of the V2500, 57%6. As the fleet moves from the older engine to the newer one, Pratt keeps a slightly smaller slice of every aftermarket dollar, which is one more reason the GTF has to earn more per visit than it did in 2024 to replace the V2500's income.

Pratt & Whitney does not split its aftermarket by engine, so the V2500's contribution cannot be read directly. Its absence would be seen in a segment margin that falls as the old fleet retires; the margin was 7.9% in 202578.

Moat trajectory: Holding steady

Mature fleet; Rolls-Royce flight-hour payments end June 2027.

The number that tests this moat
Reported
Pratt & Whitney operating margin, latest quarter
8.3% (Q2 2026: $738M on $8,889M)

The blend of old and new aftermarket; a fall as V2500s retire would mean the GTF is not replacing their income.

Source: RTX Q2 2026 earnings release ↗
⚠ Threats to the moat
⚠ THREAT 01
The Old Fleet Retires
Pratt & Whitney's most profitable overhauls come from an engine that is out of production and can only retire.
References
  1. ReportedPratt & Whitney holds a 61% program share interest in the IAE collaboration with MTU Aero Engines and Japanese Aero Engines Corporation, and a 49.5% ownership interest in IAE.
    RTX Form 10-K for fiscal 2025 - Item 1 business: the three segments and their products, the GTF family powering more than 2,600 aircraft for over 90 operators, the F135 as sole-source engine on all F-35 variants, GTF Advantage certification, the IAE collaboration shares, employees (about 180,000 in 52 countries, 69% in the U.S.) and the divested businesses. — FY2025 · publ. 6 February 2026 · source ↗
  2. ReportedAfter considering sub-collaborators, Pratt & Whitney's net program share is 57% in IAE and 51% in the GTF company, IAE LLC.
    RTX Form 10-K for fiscal 2025 - Item 1 business: the three segments and their products, the GTF family powering more than 2,600 aircraft for over 90 operators, the F135 as sole-source engine on all F-35 variants, GTF Advantage certification, the IAE collaboration shares, employees (about 180,000 in 52 countries, 69% in the U.S.) and the divested businesses. — FY2025 · publ. 6 February 2026 · source ↗
  3. ReportedAnd the V2500 still carries a legacy cost: flight-hour payments to Rolls-Royce, the former partner, which RTX says continue "through June 2027".
    RTX Form 10-K for fiscal 2025 - Item 1 business: the three segments and their products, the GTF family powering more than 2,600 aircraft for over 90 operators, the F135 as sole-source engine on all F-35 variants, GTF Advantage certification, the IAE collaboration shares, employees (about 180,000 in 52 countries, 69% in the U.S.) and the divested businesses. — FY2025 · publ. 6 February 2026 · source ↗
  4. ReportedThe contrast with the GTF explains the 2024 mix comment: older engines were earning more per overhaul than the new ones.
    RTX Form 10-K for fiscal 2025 - Item 7 segment review and Note 20: net sales and operating profit by segment for 2023-2025, organic sales drivers (commercial aftermarket, OEM, military), sales by customer type, products and services, segment assets, capital expenditure and research and development - Pratt & Whitney: segment sales, operating profit, organic drivers, customer types, assets and capital expenditure. — FY2023-FY2025 · publ. 6 February 2026 · source ↗
  5. ReportedPratt & Whitney's net share of the GTF programme, 51%, is smaller than its net share of the V2500, 57%.
    RTX Form 10-K for fiscal 2025 - Item 1 business: the three segments and their products, the GTF family powering more than 2,600 aircraft for over 90 operators, the F135 as sole-source engine on all F-35 variants, GTF Advantage certification, the IAE collaboration shares, employees (about 180,000 in 52 countries, 69% in the U.S.) and the divested businesses. — FY2025 · publ. 6 February 2026 · source ↗
  6. ReportedPratt & Whitney's net share of the GTF programme, 51%, is smaller than its net share of the V2500, 57%.
    RTX Form 10-K for fiscal 2025 - Item 1 business: the three segments and their products, the GTF family powering more than 2,600 aircraft for over 90 operators, the F135 as sole-source engine on all F-35 variants, GTF Advantage certification, the IAE collaboration shares, employees (about 180,000 in 52 countries, 69% in the U.S.) and the divested businesses. — FY2025 · publ. 6 February 2026 · source ↗
  7. ReportedIts absence would be seen in a segment margin that falls as the old fleet retires; the margin was 7.9% in 2025.
    RTX Form 10-K for fiscal 2025 - Item 7 segment review and Note 20: net sales and operating profit by segment for 2023-2025, organic sales drivers (commercial aftermarket, OEM, military), sales by customer type, products and services, segment assets, capital expenditure and research and development - totals across segments: segment sales and profit, eliminations, acquisition accounting and FAS/CAS adjustments. — FY2023-FY2025 · publ. 6 February 2026 · source ↗
  8. Moat Explorer calcIts absence would be seen in a segment margin that falls as the old fleet retires; the margin was 7.9% in 2025.
    Moat Explorer calculation from RTX's segment results (Forms 10-K FY2023 and FY2025, Q2 2026 earnings release; $ millions). Operating margins: Collins 2,380 / 21,152 = 11.3% (2021), 2,816 / 23,052 = 12.2% (2022), 4,923 / 30,196 = 16.3% (2025), H1 2026 2,613 / 15,812 = 16.5%, Q2 2026 1,306 / 8,210 = 15.9%, Q1 2026 (first half less Q2) 1,307 / 7,602 = 17.2%; Pratt & Whitney 454 / 18,150 = 2.5% (2021), 1,075 / 20,530 = 5.2% (2022), 2,015 / 28,066 = 7.2% (2024), 2,596 / 32,916 = 7.9% (2025), H1 2026 1,448 / 17,062 = 8.5%, Q2 2026 738 / 8,889 = 8.3%; Raytheon 3,399 / 26,611 = 12.8% (2021), 2,448 / 25,176 = 9.7% (2022), 2,379 / 26,350 = 9.0% (2023), 3,227 / 28,043 = 11.5% (2025), Q2 2026 1,042 / 8,269 = 12.6%; Q1 2026 Raytheon sales 15,214 - 8,269 = 6,945. Growth 2021-2025: Collins 30,196 / 21,152 - 1 = 43% (about 9% a year), operating profit 4,923 / 2,380 = 2.07 times; Pratt & Whitney 32,916 / 18,150 - 1 = 81%, 2025 32,916 / 28,066 - 1 = 17%; Raytheon 28,043 / 26,611 - 1 = 5%. 2025 shares of segment sales (91,155): Pratt & Whitney 36%, Collins 33%, Raytheon 31%; of segment operating profit (10,746): Collins 4,923 = 45.8%, Raytheon 3,227 = 30.0%, Pratt & Whitney 2,596 = 24.2%. Operating profit over segment assets 2025: Collins 4,923 / 71,680 = 6.9%, Raytheon 3,227 / 44,795 = 7.2%, Pratt & Whitney 2,596 / 52,482 = 4.9%. Pratt & Whitney services share 14,449 / 32,916 = 44%; services growth 14,449 / 9,717 = 1.49 times. Collins commercial share 18,858 / 27,585 = 68%; Collins government sales 7,061 + 436 + 1,230 = 8,727, 8,727 / 27,585 = 32%. Raytheon U.S. government share 19,237 / 27,892 = 69%. Collins services share 6,118 / 27,585 = 22%. Pratt & Whitney segment assets 52,482 / 44,307 - 1 = 18%. Pratt & Whitney 2025 defence bookings other than F135: about 9.0 - 2.9 - 2.4 = 3.7 billion. GE Aerospace Commercial Engines & Services profit 8,861 against Pratt & Whitney 2,596: 3.4 times; margins 26.6% against 7.9%. — 2021-2026 · publ. September 2026 · source ↗
    Method: Arithmetic on figures reported in RTX's Forms 10-K and 10-Q, earnings releases, earnings call and market data; operands shown in the source line.
Sources
Generated September 28, 2026