MarketVibe - S&P 500 Business Analysis | Business Investing

Discover how a microwave oven inventor and an engine pioneer merged to create RTX, the aerospace titan powering everything from the F-35 to the moonwalk.

Show Notes

Discover how a microwave oven inventor and an engine pioneer merged to create RTX, the aerospace titan powering everything from the F-35 to the moonwalk.

[INTRO]

ALEX: If you’ve ever used a microwave to heat up leftovers, you have a massive defense contractor to thank for that.

JORDAN: Wait, what? I thought microwaves were just... kitchen magic. Are you saying my popcorn is basically military technology?

ALEX: Exactly. An engineer at Raytheon named Percy Spencer was working on radar equipment during World War II when he noticed a candy bar in his pocket had completely melted. That accidental discovery led to the first microwave oven, but today, that same company is one half of RTX—a conglomerate so big it builds the engines for the F-35, the missiles defending Ukraine, and even the life-support systems for astronauts.

JORDAN: So they went from melting chocolate to powering the entire military-industrial complex. How did one company end up owning nearly every piece of the sky?

[CHAPTER 1 - Origin]

ALEX: To understand RTX, you have to look at two separate giants that spent a century growing in parallel. On one side, you have the Raytheon Manufacturing Company, founded in a Cambridge lab in 1922 by Vannevar Bush and his partners. They started with radio tubes but became essential during World War II because they figured out how to mass-produce magnetrons for radar.

JORDAN: Radar was basically the 'secret weapon' of the 40s, right? It changed everything.

ALEX: It did. And while Raytheon was mastering electronics, another man named Frederick Rentschler was obsessed with the hardware of flight. In 1925, he founded Pratt & Whitney in Connecticut. His engines were so good that by the late 1950s, his JT3 engine was the reason the Boeing 707 could fly people across the ocean. He essentially launched the commercial jet age.

JORDAN: So we have the 'brains' at Raytheon doing electronics and the 'muscle' at Pratt & Whitney doing engines. Were they rivals back then?

ALEX: Not really rivals, more like neighbors in the same massive neighborhood. Pratt & Whitney eventually became part of a huge conglomerate called United Technologies, or UTC. For decades, both companies just kept swallowing smaller firms. Raytheon bought up missile and radar companies, while UTC bought everything from Otis elevators to Carrier air conditioners.

JORDAN: Wait, elevators and air conditioners? That feels a long way from fighter jets.

ALEX: It was! For a while, UTC was like a giant mall of industrial products. But as the world changed, both companies realized they needed to specialize. In the late 2010s, UTC spun off the elevators and AC units to focus strictly on aerospace. They were preparing for the ultimate union.

[CHAPTER 2 - Core Story]

JORDAN: Okay, so when does the 'merger of equals' happen? Because 'merger of equals' usually means someone is getting a much bigger office.

ALEX: It happened in April 2020, right as the world was shutting down for the pandemic. United Technologies and Raytheon completed a 135-billion-dollar deal. They combined UTC’s engines and flight systems with Raytheon’s missiles and sensors. They called the new titan Raytheon Technologies, but just last year, they rebranded the whole thing to simply: RTX.

JORDAN: Moving to a three-letter name sounds like they’re trying to look like a tech startup instead of a hundred-year-old defense firm. How do they actually operate now?

ALEX: They’ve split the empire into three pillars. First is Collins Aerospace—they do the 'insides' of planes, like the cockpit displays and landing gear. Then you have Pratt & Whitney, who still dominate the engine market. And finally, the Raytheon segment, which handles the high-tech weaponry like the Patriot missile system and the Tomahawk cruise missile.

JORDAN: So if a plane is in the air, there’s a massive chance RTX built the engine, the electronics, and the missiles hanging off the wings.

ALEX: Pretty much. They call it 'nose-to-tail' integration. If you’re the Pentagon, RTX is your one-stop shop. They are the sole provider of the F135 engine, which is the only engine that can power the F-35 fighter jet. That makes them basically indispensable to U.S. national security.

JORDAN: That seems like an incredible amount of power for one corporation. Is it all smooth sailing, or is there a catch?

ALEX: There’s a huge catch. Being this big means your mistakes are also giant. In 2023, Pratt & Whitney discovered a tiny flaw in the powdered metal used for their engine parts. It sounds minor, but it forced them to ground and inspect hundreds of Airbus passenger jets. It’s costing them billions of dollars.

JORDAN: And I’m guessing the 'humanitarian' side of the business gets some heat too? Building missiles isn't exactly a project for peace.

ALEX: Exactly. RTX is constantly under fire from groups like Amnesty International. They’ve sold billions in weaponry to countries like Saudi Arabia and the UAE. Critics argue that these weapons have been used in conflicts with high civilian casualties, like the war in Yemen. It puts RTX right in the middle of a massive ethical debate about the military-industrial complex.

[CHAPTER 3 - Why It Matters]

JORDAN: So, they’re the engine of the economy and the engine of war at the same time. Why should the average person care about RTX today, other than the microwave in their kitchen?

ALEX: Because RTX is effectively the infrastructure of the modern sky. When you fly on a commercial jet, RTX technology is likely keeping you in the air and navigating the route. When you see news about global defense—whether it’s the Patriot systems protecting cities in Ukraine or the next generation of hypersonic missiles—you’re looking at RTX’s R&D budget in action. They spent over six billion dollars on research in 2022 alone.

JORDAN: It sounds like they are betting on the idea that the world will always need more flight and more defense.

ALEX: That’s their entire business model. They are working on everything from sustainable aviation fuels to AI-driven sensors and even life-support systems for the next moon mission. They’ve moved way beyond the kitchen microwave; they are building the tools for how humanity survives and fights in the 21st century.

[OUTRO]

JORDAN: What’s the one thing to remember about RTX?

ALEX: RTX is the invisible giant of the sky, a company that manages to be both your airline's engine mechanic and the world’s most powerful weapons designer.

JORDAN: That’s Wikipodia — every story, on demand. Search your next topic at wikipodia.ai

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