This time of year always presents an opportunity to reflect on the challenges we’ve faced, the progress we’ve made, and how we might improve as we look forward. As I think about the GE story over the course of 2020, I see a team that, despite the challenges of COVID-19, is building momentum.
From Aviation to Power, Renewable Energy, and Healthcare, we are innovating to solve some of the world’s largest challenges, contributing to safe flight, leading the energy transition, and helping health providers deliver more personalized, efficient care. I’ve called out a few recent examples for you below. And across each of our businesses, the GE team has taken strides to focus on cash and the things within our control … improving operational execution by driving lean in how we do business, building better cost structures, and reducing debt and balance sheet risk. Just last week, for example, we shared that we are now on track to reduce debt by approximately $16.6 billion in 2020 and by approximately $30 billion since the beginning of 2019 (see more detail below)—and we’ve reiterated that we expect to deliver at least $2.5 billion in Industrial free cash flow this quarter and positive free cash flow next year.
To be sure, 2020 has required resilience and sacrifice both professionally and personally. But I’m amazed at how my GE colleagues continue to rise to the challenge, working through the uncertainty to drive important change that accelerates the transformation of the company. And I’m grateful for you for your continued candor and engagement that challenges us, encourages us, holds us accountable, and helps us to become a better company.
In the midst of this pandemic, the personal challenges that surround us, at home, in our communities, at work, and further away, seem daunting on a daily basis. Yet I am frequently reminded and inspired by my teams, colleagues, family and friends that together we will persevere and rise above.
Wishing you and your families good health, safety, and a much better 2021.
Happy Holidays and thank you for your continued interest in GE,
GE takes additional steps to reduce debt and actively manage risk
As you may have seen, we recently launched and completed a $2.17 billion debt tender out of GE Capital, building on our series of actions in December to reduce GE’s debt and improve our financial position. Following the tender and including scheduled maturities in the fourth quarter, GE is now on track to reduce debt by approximately $16.6 billion in 2020 and by approximately $30 billion since the beginning of 2019.
In addition, last week GE announced that we transferred approximately $1.7 billion of U.S. GE Pension Plan obligations by purchasing group annuity contracts from subsidiaries of Athene. With this change, pension benefits for covered retirees continue in the same amount, on the same schedule, from a highly rated insurance company that already insures the retirement benefits of nearly one million policyholders. This transaction is part of GE’s long-term strategy to actively manage pension risk, and while it doesn’t change the Plan’s funded status or funding requirements in the future, it does reduce the size of GE’s total pension obligation and related costs.
We also recently announced a settlement in connection with the SEC’s investigation of GE’s past disclosures of assumptions or potential risk in our Power and Insurance businesses from 2015-2017. We concluded that it is in the best interests of GE and its shareholders to settle this matter, and consistent with common SEC practice, we neither admitted nor denied the SEC’s allegations. This resolves the SEC investigation of GE in its entirety, and no corrections or revisions to our financial statements are required. We are pleased to have reached an agreement that puts the matter behind us. Under the current leadership team, we have significantly enhanced our disclosures and internal controls and are a stronger company today.
100 days in with GE Aviation CEO John Slattery
Pictured above: GE Aviation President and CEO John Slattery. Image credit: GE Aviation
In an interview marking his first 100 days leading the business, GE Aviation President and CEO John Slattery discusses COVID-19’s impact on the aerospace industry, preparing for the return to service of the Boeing 737 MAX, and reflections on hybrid-electric and hydrogen-powered flight. Slattery, who joined GE in July and assumed his role at GE Aviation in September, notes, “I’ve devoted a great deal of my attention to running the ruler over the organization with emphasis on three areas: our customers, our culture, and how we position ourselves for near-term and long-term success.” Read the interview here.
Powering what will become the world’s largest wind farm
Last week GE Renewable Energy announced it has reached an agreement to supply Haliade-X offshore wind turbines for the 1.2-gigawatt third phase (C) of the Dogger Bank project in the United Kingdom – what will become the world’s largest wind farm.
This builds on our order to supply 190 Haliade-X turbines for the first two phases of the project (A & B) as well as reaching financial close on those phases. The Haliade-X was designed as a platform that could evolve with market needs. It began by producing 12 megawatts—where a single rotation of the turbine could generate enough power for one U.K. household for two days—but the turbine technology has been performing so well during testing and certification that the version headed to Dogger Bank C will be capable of generating up to 14 MW, while the machines for Dogger Bank A and B will be rated at 13 MW.
GE Healthcare launches “Virtual ICU” solution to extend access to critical care throughout Oregon
Health experts at Oregon Health & Science University (OHSU), Oregon’s only academic health center, will now be able to help provide care to ICU patients across eight hospital sites via a “Virtual ICU” (VICU), using the GE Healthcare Mural Virtual Care Solution. Enabled by Edison, GE Healthcare’s intelligence platform, the VICU gives critical care specialists digital tools to remotely identify changes in patient status, respond in real time, and support local clinicians caring for patients in their local communities. This helps to extend quality care to patients in rural communities where specialists are not otherwise available.
“I can fully focus on the patient—who may be physically hundreds of miles away—in real time, by watching vital signs, lab values, waveforms and other parameters,” said OHSU Associate Professor of Anesthesiology and Perioperative Medicine and TeleICU Medical Director Marshall Lee, M.D. “And by enabling audio and visual support in the patient room, I can virtually visit and collaborate with the local, bedside team.” Read more about this technology here.