MORE THAN $11.5 BILLION IN DEAL CLOSINGS AND OTHER ACTIONS
Part of the strategy GE laid out earlier this year involves reducing the company’s debt load. A stronger balance sheet and greater independence and accountability will help set GE’s businesses up to succeed.
Concrete steps to strengthen GE’s balance sheet: GE announced a reduction of its dividend, which will save nearly $4 billion in cash over the course of 2019. Over the past two weeks, the company also sold a portion of its stake in Baker Hughes, a GE company; closed the sale of its Distributed Power business; and sold a portfolio of loans and leases from GE Capital’s Healthcare Equipment Finance business to TIAA Bank.
Together, these actions will be worth more than $11.5 billion in net cash proceeds and savings that can be used to strengthen GE’s balance sheet. The company also recently announced plans to sell Current, powered by GE, its “intelligent environments” business, to the New York-based private equity firm American Industrial Partners and its gasification business to Air Products for undisclosed amounts.
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NEW LEADERSHIP FOR NEW GE POWER UNITS, JOHN RICE RETURNS
The second part of the company’s plan is to give its businesses more autonomy, so they can better focus on their customers and execution. Two weeks ago, GE said that it intends to split Power into two units: GE Gas Power, comprising the Gas Power Systems and Power Services divisions, and GE Power Portfolio, which will hold Power’s Steam, Grid Solutions, GE Hitachi Nuclear and Power Conversion operations. The company also announced that it intends to consolidate the current Power headquarters structure into GE Gas Power to create a more simplified business structure that can best serve its customers.
New leadership for new Power: The company said that John Rice, a retired GE vice chairman who spent almost four decades at the company, would return to serve as chairman of the GE Gas Power business. Scott Strazik, an 18-year veteran of GE and current president and CEO of GE Power Services, has been named CEO of the GE Gas Power business, reporting to GE Chairman and CEO Larry Culp.
Russell Stokes, the current president and CEO of GE Power, will serve as CEO of the GE Power Portfolio unit, reporting directly to Culp as well. “I am confident this is both the right strategy and the right leadership team to ensure these businesses are best positioned for success,” Culp said.
Find out more about the new structure of GE’s Power units here.
FLY THE ULTRA-EFFICIENT SKIES
Speaking of customers, the narrow-body Airbus A321neo usually flies shorter routes within the U.S., Asia and Europe. But earlier this year one of the planes — outfitted with a LEAP jet engine produced by CFM International, a 50-50 joint venture between GE Aviation and Safran Aircraft Engines — set a world record with a flight between the Icelandic capital of Reykjavik and sunny Los Angeles. With just 8 hours and 46 minutes between wheels-up and landing, the plane didn’t even stop for gas — and ushered in a new era of ultra-efficient long-distance travel.
One giant LEAP for smaller planes: The RKV-to-LAX voyage was made by WOW air, an Icelandic low-fare carrier whose customers rely on it to keep costs down. Once the province of big Boeing and Airbus models, long-haul flights are increasingly available to smaller craft like the A321neo and the Boeing 737 MAX 8 due to the power of the LEAP engine, which combines 3D-printed parts and state-of-the-art composite materials to squeeze out every ounce of efficiency. Johann Helgason, WOW’s chief technical pilot, says, “For me to be flying at 39,000 feet, almost fully loaded at Mach 0.79 — which for a narrow-body Airbus is actually quite high — and be burning less than 1,000 kilograms of fuel per hour per engine is just absolutely unbelievable.”
Read more about WOW and its planes here.
— VIDEO OF THE WEEK —
Quote: GE Reports. Image: GE Reports.
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