Raytheon Technologies CEO predicts flat defense spending but says no 'doom and gloom'

By Marjorie Censer / July 28, 2020 at 9:40 AM

The chief executive of Raytheon Technologies said today the company is not expecting defense spending growth in the coming years, but it is confident in its backlog and success in classified and cyber work.

"We know defense spending is not going to be going up in the near-term given the deficits that are out there," Greg Hayes said during a call with analysts this morning. But, "in the classified and the cyber and the space businesses, lots of opportunity there."

Regardless of a change in the White House or in congressional leadership, he said, "we still expect the need for a strong national defense will remain."

Raytheon is "not forecasting any doom and gloom scenarios for defense in the next few years," Hayes added.

Toby O'Brien, Raytheon's chief financial officer, said the contractor is still seeing strong international sales. International revenue makes up about 30% of the company's sales, he noted.

Meanwhile, Hayes said Raytheon is expecting a prolonged recovery for commercial aerospace. He said the company now thinks it will take until at least 2023 for commercial aircraft to return to 2019 levels.

Hayes said Raytheon is assessing its commercial costs and will be making "tough" decisions.

"It's unfortunate, but it's absolutely necessary given the market," he said.

Meanwhile, Raytheon Technologies reported today that sales during its most recent quarter totaled $14.1 billion, up about 24% from the same three-month period a year earlier. The company recorded a quarterly loss of $3.8 billion, compared to $1.9 billion in profit the prior year.