A record $130 billion backlog at Raytheon and a book-to-bill ratio of 2.9x over the past 12 months underscore how dramatically global security demand has reshaped RTX Corp’s (NYSE: RTX) financial profile.
That commercial momentum helped persuade S&P Global Ratings to lift RTX’s issuer and unsecured issue-level credit ratings one notch to ‘A-‘ from ‘BBB+’ on Friday, assigning a stable outlook in the process.
The agency simultaneously affirmed RTX’s ‘A-2’ short-term rating, projecting that the company will hold adjusted debt to EBITDA below 2.5x while keeping funds from operations to debt above 30%.
Pentagon framework agreements covering expanded production of Tomahawk cruise missiles, AMRAAM air-to-air missiles, and Standard Missile interceptors are central to the backlog build, with S&P anticipating output scaling two- to fourfold over coming years.
Defense operations represent roughly half of RTX’s total revenue, and the elevated threat environment shows little sign of abating, providing a durable demand floor for the company’s munitions and systems businesses.
On the commercial aerospace side, persistent aircraft undersupply and deep manufacturer order backlogs give Collins Aerospace and Pratt & Whitney strong revenue visibility well into the next decade.
Pratt & Whitney is particularly well-positioned, supplying engines for approximately 40% of all new Airbus A320 family jets, though S&P flagged that higher fuel costs and ticket prices tied to the ongoing conflict with Iran could moderate broader air travel expansion.
Progress on fixing a manufacturing defect discovered in Pratt & Whitney’s PW1100 geared turbofan engines in July 2023 has meaningfully reduced one of the company’s most significant operational risks, with RTX now more than halfway through its inspection and repair program.
GTF engine service output has climbed 30% over the past year, grounded aircraft counts have fallen 25% since late 2025, and just $200 million of the original $2.8 billion in airline compensation liability remains outstanding.
The credit upgrade also reflects RTX’s deliberate effort to unwind the leverage taken on during a $10 billion debt-funded accelerated share repurchase executed in late 2023, with $2.9 billion still to be retired before buybacks resume.
Free operating cash flow is forecast to exceed $9 billion this year against roughly $30 billion in adjusted debt, with further expansion anticipated in 2027, giving management substantial capacity to service obligations while sustaining approximately $3.7 billion in annual dividend payments.
S&P noted that heightened U.S. government scrutiny of capital returns within the defense sector is an additional reason for near-term buyback restraint, even after the remaining debt from the 2023 repurchase is cleared.
A further rating improvement could materialize within 12 to 24 months, but only if RTX drives leverage comfortably below 2.0x and lifts funds from operations to debt above 45%, conditions that aggressive debt-financed repurchases or renewed supply chain disruptions could quickly undermine.
