UPDATE: GE reports double-digit growth for first quarter

By Bryan Corliss

April 25, 2023, © Leeham News – GE reported generating its first free cash flow in a decade, along with double-digit growth in orders, revenue, and operating profit, amid what it called a “robust” market for commercial aircraft engines and services.

The company reported a profit of $1.3 billion from its GE Aerospace segment in the first quarter, up 46% from the same quarter last year.

The highlight of the quarter was the sale of some 800 LEAP engines to Air India, which will power the airline’s new Airbus and Boeing jets. The engines will be built by CFM, the joint venture between GE and Safran.

In addition, GE won the orders for the engines powering the 30 Boeing 777X and 787 jets Air India ordered, making it arguably the biggest winner in the year’s biggest aircraft deal. 

  • GE CEO sees supply chain stabilizing
  • Services generate more revenue
  • How long will good times last? 

GE CEO sees supply chain stabilizing

CEO Larry Culp said he sees signs that the aerospace industry supply chain is stabilizing after protracted turmoil in the wake of the Covid-19 pandemic.

GE CEO Larry Culp

“We are making progress,” he said. “If you look at supplier on-time delivery as one example, if you look at material inputs being another, just our ability to hit our targets on a weekly basis internally, I see signs of progress.” 

Culp added that “it’s still challenging – I don’t want to, in any way, suggest otherwise. But I’m encouraged by what we’re doing.” 

GE’s Defense business, however, was affected by continuing shortages of materials and “supplier challenges,” Culp said. That led to a 2% decline in the unit’s revenues. 

“We’re working as hard as we can within our own facilities and with our suppliers to deliver as much as we possibly can,” he said.

Services generate more revenue

Services revenue grew by more than 30%, Culp said. Shop visits also were up 30% and external spare parts sales were up more than 20%. 

GE is relying more on its MRO partners to do services work, he said. GE has added two more companies to its LEAP MRO network (for a total of five globally).

Third-party MRO shops working under license from CFM handle almost 70% of the CFM56 shop visits, Culp said. Adding the two new MRO providers for LEAP engines is “another step in the right direction to set this business up to have a similar profile over time.”

How long will the good times last?

Culp said the robust demand, particularly for services, should continue throughout 2023. 

“Services for a full year, we think will be up in the high teens to 20%,” he said. “It couldn’t be more robust, and that’s pretty well-balanced, both in terms of shop visits, spares and the like.” 

However, given the current global economic uncertainty, “we’re not unmindful that there is some discussion around how long the flying public will indeed fly at this pace,” Culp said. 

“We’ll see how that plays out,” he continued. “But you’ve heard from a number of the airlines already this earnings cycle where the CEOs, I think are uniformly bullish. Not only here, but in Europe.” 

“In terms of when demand normalizes, that’s probably a question for another day,” Culp said. “Given the (Airbus and Boeing production) ramp, given the services ramp back – on the back of what we’re seeing broadly with departures – we’re optimistic about not only this year, but the near term.”

5 Comments on “UPDATE: GE reports double-digit growth for first quarter

  1. Encouraging some of Boeings biggest partners are doing well. They too have been hit by the delays, production stops and the big Covid dip. Hopefully they can spend on ramping up, product development and hiring good people.

    • Sometimes GE helps Boeing by buying exclusivity on new aircraft programs cash. We will see if that happens on the 797 after GE pays down debt?

      • Ive never heard or seen ‘real’ numbers on GE buying exclusivity for its engines from Boeing. ( RR with Airbus)
        Considering the fuel efficiency numbers for the neo and max came almost exclusively from the engines, it should be the other way around. Remember it might be $2-5 bill for the manufacturer but maybe a $8-10 bill investment by the engine maker , all the while they are making good money from existing lines.
        My take . Its an urban myth

        • The 777-300ER is the last known example GE paid the development cost cash to Boeing, maybe part of the 777-9 as well? Historically it also has been US government support for US airframe with a US engine combination. You need to spend $12-24 bn for a new large commercial airframe and +$10bn for a brand new engine. A 797 engine might use the GEnX-2B engine core and get a cheap LP section from Safran/IHI with their governments support making GE investment in the few $bn range before sending +$10bn to Boeing for exclusivity. We will see, Boeing needs great engineers to design the 797 that might not be fully trained yet.

  2. To be precise: it is the first positive free cashflow in a first quarter of the last 10 years. The first quarter is usually the most difficult one. GE had other quarters with positive cash flow in the past.

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