SINGAPORE - February 25, 2002 - General Electric Company has mobilized since the terrorist attacks last September 11 to support the financial stability of its airline customers.
The various aviation businesses of GE have committed more than $4.1 billion of financial support to their airline customers since September 11 to address urgent cash-flow needs, said David Calhoun, president and chief executive officer of GE Aircraft Engines (GEAE), a business unit of GE.
GE has been a key participant in the airline industry for more than 30 years, and we know it will come back. The corporation has stepped up with a variety of secured financing arrangements. We know our success is wholly dependent upon the success of our customers.
GEAE's positive long-term outlook for the industry is reflected in the largest commercial engine development activity in the company's history, including certification of three CF34 engines for the regional jet market, the GE90-115B for longer-range Boeing 777s, and the GP7200 for the Airbus Industrie A380, which GEAE is jointly developing with Pratt & Whitney through the GE-P&W Engine Alliance.
These investments are indicative of our faith in this business, Calhoun said. We are confident that our commercial aviation customers will eventually pull through these difficult times and return to the long-term growth anticipated before September 11.
For more than a year, GEAE has deployed its own Six Sigma quality teams to commercial and military customers worldwide and helped them to complete cost-savings projects. Since September 11, GEAE has sharply accelerated the project completion to assist customers in identifying ways to operate more cost effectively. Also, GE Engine Services, a division of GEAE, is reducing engine overhaul turn-around times, improving on-wing engine life, and finding ways to lower engine maintenance costs.
By improving and standardizing processes within GE Engine Services' global network of repair and overhaul shops, the company has sharply improved delivery times to its customers, in some cases, by more than 50 percent.
GEAE, which posted 2001 revenues of $11.4 billion, anticipates a 20 percent to 25 percent decline in its commercial engine deliveries in 2002, and a 15 percent to 20 percent decline in commercial jet engine revenues. Its GE Engine Services operation also expects a double-digit decline in 2002 before recovering in 2003. Calhoun does not anticipate a recovery in new jet engine orders until 2004. The strength of GE's business model allows us to weather these downturns with our customers, Calhoun said.
GEAE is combating the market downturn through aggressive cost reductions, efficiencies through digitization, increased military business, and by supporting the company's base of installed base of GE and CFM jet engines in airline service, which now exceeds 15,000 engines and will surpass 20,000 engines this decade.
GEAE and CFM International, a 50/50 joint company of Snecma of France and GE, have continued to win more than 50 percent of the world's commercial jet engine orders. This consistent success, combined with GEAE's aggressive focus on developing and expanding its engine services operations and product offerings in recent years, has positioned the company to better weather the difficult months ahead. We have a considerable backlog in long-term, customized engine service agreements under contract for both the GE and non-GE engine we maintain for our customers, said Calhoun.
Our military engine business is growing, and we are best positioned to capitalize on the expanding regional jet aircraft market. GEAE will emerge from the current aviation recession stronger than before.
GE (NYSE:GE) is a diversified technology, services and manufacturing company with a commitment to achieving customer success.
GE operates in more than 100 countries and employs approximately 310,000 people worldwide.
For more information, visit the company's Web site at http://www.ge.com.
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