Farnborough Air Show

New GE Aerospace Unit Laser-focused on Airline Recovery

 - July 19, 2022, 3:46 AM
GE’s engine business remains a key part of the new Aerospace unit’s product portfolio. (Photo: GE)

The spin-offs of GE’s energy and health care businesses will boost the group’s balance sheet, mainly by relieving debt pressure, but in a Farnborough Airshow press briefing on Monday company leaders also maintained it will give its aviation unit a sharper focus on what matters to customers. Earlier in the day, the U.S. corporate giant announced that it will rebrand GE Aviation as GE Aerospace, as the new GE HealthCare unit prepares for a Nasdaq listing in early 2023, followed by the rebranded GE Vernova energy business in 2024.

More urgently, GE says it is “laser-focused” on helping its airline customers recover from the post-Covid shockwaves of poor fleet reliability and rising costs. That means improving production rates for aircraft engines and parts and making aftermarket support more responsive.

According to GE group chairman and CEO Lawrence Culp, who now serves as CEO of GE Aerospace, his customers want assured levels of performance. “We’re trying to make sure we use our lean capabilities and engineering expertise to bust the bottlenecks to improve [production] capacity and ensure stability and predictability,” he told reporters. “OEMs don’t want a certain number of engines in one month, and so every day we’ve got GE’s engineers and procurement and manufacturing leaders streamlining processes with vendors and their suppliers so that we can deliver a predictable and stable ramp-up.”

With an earnings call scheduled for July 26, the GE leadership team was reluctant to elaborate on the specific extent to which it is improving performance, while acknowledging that it has not met mid-year delivery targets for Airbus and Boeing. Culp suggested it could take another 18 months for GE and its customers to recover at a time when “the industry is grappling with a bounceback [in post-pandemic demand for flights] at a time of extreme economic pressure.”

With skills shortages continuing to impede the wider aviation industry, GE’s focus is on expediting output by reducing production touch and cycle times. “At a time when we can afford absolutely no inefficiency, we are identifying waste and dropping labor demand and improving yields at the various quality checks,” Culp explained. “You can’t buy that anywhere.”

In the longer term, GE Aerospace seems likely to control the funds needed to expand its product portfolio potentially beyond current engines. That will likely involve increased investment in new reduced-carbon propulsion technology, but also in other aircraft systems.

John Slattery, who until the restructuring was GE Aviation CEO and now serves as executive v-p and chief commercial officer of the rebranded aerospace unit, expressed a desire to see the systems business grow “exponentially.” He and Culp said they will first consider opportunities for organic growth.