GE Aerospace (GE): Ενδυναμώνοντας την Αμερικανική Αριστεία στις Πτήσιμες Μηχανές

GE Aerospace: Ιστορία και Κληρονομιά Καινοτομίας

General Electric (GE.TO ), or GE, started as the Edison General Electric Company in 1889 and turned into a diverse industrial conglomerate with an increasingly finance-focused outlook in the 1990s and 2000s.

As part of this diversification, it entered the airplane business in 1917, when the USA entered World War I.

The US government needed a company to provide its nascent Air Force with its first airplane engine “booster”: also called a turbosupercharger, installed on a piston engine, it used the engine’s exhaust gases to drive an air compressor to boost power at higher altitude.

GE, an energy company, has extensive experience with turbines for power plants and has transferred this expertise to plane turbines and engines.

Today, the company’s energy activity is gathered in the GE Vernova, which we covered in a dedicated report: “GE Vernova (GEV): Αντιμετωπίζοντας την Παγκόσμια Άνοδο της Ζήτησης Ενέργειας”.

Ιστορία GE Aerospace

The Aerospace division, now GE Aerospace (GE ), became quickly the driving force behind American excellence in jet engine manufacturing. Among its many historic achievements, a few can be mentioned:

• Η μαζική παραγωγή τουρμποσυμπιεστών επέτρεψε στα αεροσκάφη να πετούν υψηλότερα, με μεγαλύτερο φορτίο.
• Ο πρώτος αεριοκινητήρας των ΗΠΑ.
• Οι πρώτοι τουρμποαντλικοί κινητήρες που ενίσχυσαν πτήσεις σε δύο και τρεις φορές την ταχύτητα του ήχου.
• Ο πρώτος υψηλού bypass turbofan κινητήρας, που επέτρεψε βελτιωμένη απόδοση καυσίμου, μειωμένες εκπομπές θορύβου και βελτιωμένη συνολική απόδοση.

For a while, GE Aerospace was solely a military jet engine manufacturer, having equipped the US Air Force in WW1, WW2, Korea, and the Cold War.

Using the TF39 military engine as a template, it developed its first civilian engine in 1971, the CF6 engine. It would turn out to have the largest installed base of any widebody engine in history, with the latest version, the CF6-80C2, still in production today.

Πηγή: GE Aerospace

Η Αναγέννηση της GE Aerospace: Από το Συγκρότημα στον Ηγέτη του Αεροδιαστήματος

Since its foundation as an energy company, and then its extension as a plane engine manufacturing company, GE lost its way in the 1990s.

During this period and in the 2000s, GE started to make multiple acquisitions and diversification moves to turn it into a giant industrial conglomerate, with activities spreading into healthcare, telecommunication, computing, entertainment, etc.

This turn started in 1981 under the direction of the company’s CEO, Jack Welch, who focused on the company’s financial performance first and engineering prowess second.

Πηγή: Reuters

He was also renowned for his ruthless approach to management. He notably pioneered the practice of annually firing 10% of the employees with the lowest ratings on internal reviews, earning him a comparison to a neutron bomb, leaving only the empty building after him (“Neutron Jack”).

Another trend of this period was the financialization of the company, with the rise of GE Capital, the banking arm of the company. At one point, GE Capital ήταν εταιρεία αξίας $500B, δημιουργώντας 2/3^rd των κερδών της GE.

GE Capital hands were in everything from credit cards to insurance, to mortgages. At the time, this was all seen as a smart, low-cost way to boost profits. “And you don’t have to build a factory,” Welch supposedly enthused.

At the time, acclaimed as a revolution in management, Welch’s methods would ultimately prove to be almost fatal to the company.

Πηγή: Amazon

Creative accounting and over-reliance on the banking branch came to a crash in 2008. The company had to divest at bargain prices many branches like NBC-Universal, GE Plastics, GE Water, and GE Appliances.

This created an almost 2-decade-long crisis, with a decline in aviation sales due to the pandemic, made worse. Ultimately, this led to the split of the company into 3, with each sub-segment more concentrated on a unique technological advantage and able to go its own way.

So the old GE conglomerate is now history and replaced by GE Vernova (the energy branch) (GEV ), GE Healthcare (GEHC ) (Medical devices, imaging, and software), and GE Aerospace.

GE Aerospace: Προϊόντα, Υπηρεσίες και Στρατηγική Αγοράς

GE Aerospace Κατά Αριθμούς

Now, leaving behind the trouble of both the Welsh era and the pandemic, GE Aerospace is a force to reckon with in the airplane engine industry.

For example,  at any given time, up to 950,000 people are flying on GE-powered aircraft, with 3.4 billion passengers flying with GE technology per year. These impressive numbers are reached because no less than 3 out of 4 commercial flights are powered by GE Aerospace’s fleet of 44,000 engines in service.

More than 70% of the commercial engine revenues are derived from service & maintenance, and 55% of the defense engines revenues.

Προϊόντα

The company’s main activity is split between its civilian/commercial activity, and its defense activity, both focused on jet engines.

Πηγή: GE Aerospace

Η GE Aerospace παράγει κινητήρες που τροφοδοτούν στρατιωτικά αεροσκάφη όπως τα F-15, F-16 και F/A-18 Super Hornet. Η GE επίσης αναπτύσσει προχωρημένους κινητήρες όπως το XA100 για μελλοντικά στρατιωτικά αεροσκάφη. 

Οι στρατιωτικές δυνάμεις θα ήθελαν μεγαλύτερη εμβέλεια (…), περισσότερη ώθηση, και χρειάζονται καλύτερη θερμική διαχείριση. (…) Ξέρουμε ότι το XA100 μας είναι ο μοναδικός κινητήρας που μπορεί να εκπληρώσει αυτήν την αποστολή. Είναι ο μοναδικός κινητήρας που έχει δοκιμαστεί. Διαθέτουμε δύο από αυτά.

Larry Culp – Διευθύνων Σύμβουλος της GE Aerospace

Overall, the civilian segment is the most central for GE Aerospace, making up 72% of revenues. The company’s engines are used extensively by both Boeing and Airbus’ flagship models.

Πηγή: GE Aerospace

This is not to say that the defense segment is not important, as it is often the occasion for GE’s engineers to push the limit of what is possible, and develop new technologies that are later transferred to the commercial branch.

GE Aerospace is also producing for the defense sector “αεροπαραγόμενες θαλάσσιες αεριοτουρμπίνες”, to provide power to military vessels. These turbines have the capability to burn a wide variety of fuels and meet existing and proposed environmental regulations.

Meanwhile, the defense products profit from the commercial airplane activity, as they provide GE the economies of scale that can then be reused in the production of military jet engines.

Υπηρεσίες

As aircraft engines are critical and fragile pieces of equipment, GE Aerospace makes most of its revenues from the regular maintenance and repair services, with sales of the engine only 25% of the revenues in its entire life cycle.

Πηγή: GE Aerospace

Overall, a sold engine is expected to keep generating revenues for the next 40 years.

GE Aerospace Markets

Both GE Aerospace’s civilian and military markets are driven by long-term growth trends.

The commercial flight sector is expected to grow quicker than global GDP, as more developing countries reach the threshold where flying becomes affordable for a large part of the population. Renewal of existing aging fleets of aircraft is also helping more sales of new engines.

For the defense sector, growing geopolitical tensions and defense budgets, as well the need for modernization of military aircraft fleets in the context of the return of Great Power competition, and the US facing peer adversaries (Russia, China) is also expected to grow demand for GE Aerospace engines.

Πηγή: GE Aerospace

Τι Κάνει τη GE Aerospace Ανταγωνιστική; Κλίμακα, Εμπειρία και Άμυνα

GE’s position as the world’s largest engine manufacturer puts it in a position to have a few key advantages against the rest of the industry.

Κλίμακα

The first one is simply scale, with R&D costs spread around many more unit sales. This also puts GE Aerospace in the comfortable position of having many years of backlog of orders for its engines, making its revenues for the upcoming years very predictable.

The large scale of the existing fleet of engines in service gives GE Aerospace the world’s strongest MRO network (Maintenance, Repair, and Overhaul). As airplanes generally need check ups, maintenance and repair when they land, this is a definitive strength of GE sales pitch to aircraft manufacturers, as this will make airline companies more likely to be sure their planes can be serviced anywhere in the world.

Εμπειρία

Another advantage is long expertise in the field, especially in design and manufacturing. Large facilities running at full production capacity, with predictable demand for years, will tend to be more profitable, as the capital expenditures are used optimally.

While this can also be limiting innovation, the established structures and tested safety profiles are beneficial in a conservative industry like aeronautics, looking first and foremost for safety and reliability.

Συμβάσεις Άμυνας

The dual presence in the defense and civilian sectors is one last business moat for GE, as defense contracts are notoriously difficult for newcomers to penetrate.

This not only gives the company some “guaranteed” revenue streams, but also provides GE with a customer willing to take risks with new designs, and deeper pockets, as long as better performances can be expected.

Later down the road, these innovations can then be transposed to the civilian market, once any issues and difficulties, as well as the requirement for low-cost mass manufacturing, have been ironed out.

 Το Μέλλον της GE Aerospace: Πράσινοι Κινητήρες και Επιχειρησιακή Μεταρρύθμιση

Νέοι Κινητήρες

Ανανέωση Γραμμής

The company’s new generation of engines has been launched in the 2010s and is focused on improving fuel efficiency.

Πηγή: GE Aerospace

This is of course a matter of saving money for airlines, who work in an extremely competitive industry with very thin margins, and where less fuel consumption can be a matter of life or death for airline companies.

But this will also help airlines to match their emission reduction targets, with likely penalties in the upcoming decades for the ones which stay too polluting.

Κινητήρες του Μέλλοντος

For this reason, the 2030s onward for GE Aerospace will be centered on the “RISE” engines (Revolutionary Innovation for Sustainable Engines) still in development.

It aims to achieve the same noise, speed, and altitude of today’s aircraft, but with 20% more fuel efficiency and more importantly, 100% compatible with both hydrogen and Sustainable Aviation Fuels (SAF).

These alternative fuels are largely considered the only viable option for zero-emission air transport, at least as long as battery technology has not achieved radical improvement in density to allow for electric airplanes, something which will probably take several more decades.

Μεταρρύθμιση GE Aerospace

In the post-Welch era, the company had to overhaul all of its design and industrial processes to go back to the technical and operational excellence that had built its reputation, and had somewhat been gutted by the drive for financial efficiency at all cost.

Numerous reforms have been conducted to overhaul the company’s operations:

• Συγκέντρωση εγκαταστάσεων για καλύτερο έλεγχο και εσωτερική επικοινωνία.
• Απλοποίηση εσωτερικών διαδικασιών και μείωση των γενικών εξόδων.
• Ανασχεδιασμός της αλυσίδας εφοδιασμού της GE για την ταυτοποίηση αδυναμιών και αιτιών καθυστερήσεων, πραγματοποιημένο τόσο μέσω στενότερων σχέσεων με προμηθευτές όσο και μέσω διαφοροποίησης της εφοδιαστικής.

This was notably implemented on the LEAP engine production line, where capital investment was reduced by 50% and labor productivity increased by 50%.

These reforms led η GE να εντοπίσει τους προμηθευτές που ευθύνονται για >80% των καθυστερημένων ή αποτυχημένων παραδόσεων, which can put a halt to the entire assembly line.

They are now working to solve these issues by investing in external suppliers (sometimes up to the complete acquisition of the supplier) and a much closer relationship to anticipate problems sooner, notably with a daily management of the supply.

«Οι ελλείψεις που μας κάνουν να καθυστερούμε στις παραδόσεις προέρχονται κυρίως από περίπου 15 διαφορετικούς προμηθευτές σε όλη την αλυσίδα εφοδιασμού.

Διαθέτουμε 550 μηχανικούς που συνεργάζονται με αυτούς τους προμηθευτές για την ταυτοποίηση σημείων συμφόρησης, περιορισμών, και την πραγματική επίλυση αυτών των προβλημάτων.»

Larry Culp – Διευθύνων Σύμβουλος της GE Aerospace

As these reforms already delivered a 25% increase in commercial engine delivery, it can be said the company seems on the right track.

Κατασκευή GE Aerospace: Επενδύσεις και Καινοτομία στις ΗΠΑ

From 2010 to 2016, GE Aerospace invested $4.3 billion in the USA to create new factories and to expand existing sites.

GE is planning to do another round of $1δισ. επένδυση σε δυναμικότητες παραγωγής στις ΗΠΑ το 2025, doubling the investment it did during the previous presidency. The investment comes with plans to hire 5,000 U.S. workers in manufacturing and engineering roles.

«Η επένδυση στην παραγωγή και την καινοτομία είναι πιο κρίσιμη από ποτέ για το μέλλον της βιομηχανίας μας και των κοινοτήτων όπου λειτουργούμε. Μαζί, αυτό θα διατηρήσει τις Ηνωμένες Πολιτείες στην κορυφή της ηγεσίας του αεροδιαστήματος»

Larry Culp – Διευθύνων Σύμβουλος της GE Aerospace

Among the most advanced capacities of GE can be mentioned:

• Η προσθετική κατασκευή Auburn, με σειρές πολύ προχωρημένων 3D εκτυπωτών που εγκαθίστανται για την παραγωγή χιλιάδων ψεκαστών ακροφύσεων καυσίμου για τον κινητήρα LEAP κάθε χρόνο.
• Το Εργαστήριο CMC Fastworks στο Evendale, ενσωματώνοντας την παραγωγή εξαρτημάτων κεραμικού συνθέτου (CMC).
• Η παραγωγή CMC στην Asheville, μαζική παραγωγή εξαρτημάτων CMC για εμπορικούς και στρατιωτικούς κινητήρες στη Βόρεια Καρολίνα.
• Η επεκταμένη Δοκιμαστική Λειτουργία Peebles στην αγροτική περιοχή του Adams County, Οχάιο, που αποτελείται από 11 δοκιμαστικές τοποθεσίες κινητήρων, συμπεριλαμβανομένων δύο μεγάλων εσωτερικών χώρων.

Overall, the large quantity of materials made in the USA should help limit the impact of tariffs. However, as GE Aerospace also counts among its most important clients the European Airbus, it could be caught in the crossfire if 50%+ tariffs are imposed on the EU and retaliatory tariffs are imposed on US exports.

Besides the location of its industrial production, GE Aerospace also counts on more cost controls and price hikes to protect it from the effects of tariffs.

Το Ανοιχτό Πάνελ Πτήσης της GE: Το Μέλλον της Καινοτομίας στην Αεροναυτική

GE Aerospace is a part of the “Open Flight Deck” initiative since 2017, in a industrial and academic partnership that includes BAE Systems (BSP.DE ), Rolls-Royce (RRU.DE ), Coventry University and the University of Southampton.

This looks to address the huge barrier to adopting new technologies on the flight deck due to the high cost of change and certification. This will instead develop an open standard for industry that allows interfacing functional ‘apps’ to be developed, which are then easier and quicker to deploy.

«Το Open Flight Deck θα προσφέρει μείωση του κόστους αλλαγής κατά τάξεις μεγέθους, εξασφαλίζοντας το μέλλον των πλατφορμών μέσω τακτικών αναβαθμίσεων των εφαρμογών του πάνελ πτήσης. Αυτή η τεχνολογία θα προσφέρει σημαντικά οφέλη στους μελλοντικούς κατασκευαστές αεροσκαφών, τις αεροπορικές εταιρείες και τους πιλότους.»

Alan Caslavka, πρόεδρος της Αεροναυτικής για τη GE Aviation.

This approach was pioneered on the Boeing 787 where a similar platform enables suppliers to plug in modules within an overall platform architecture, giving the aircraft manufacturer the flexibility to upgrade systems or choose the best suppliers for individual subsystems.

By setting these new standards, GE Aerospace and BAE are looking to create the next template for the industry, which could ultimately force other competitors to join in, or risk being left behind.

Οικονομική Επισκόπηση της GE Aerospace: Ανάπτυξη, Επαναγορά Μετοχών και Προοπτικές

Revenues, operating profit, and free cash flow have been steadily growing since 2023 and should keep doing so in 2025.

Πηγή: GE Aerospace

This was in large part driven by the improving efficiencies at the manufacturing level, with not only lower costs, but also more engines produced per year, leading to catching up on the massive $140B order backlog.

Historically, GE Aerospace has been a very shareholder-friendly company, even in the post Welch-era where innovation, manufacturing efficiency and engineering quality have taken back the front seat of the company’s concerns.

Returns to shareholders are mostly in the form of share buybacks, with $1.9B in buyback in Q1 2025 and $0.3B in dividends.

Most of the costs associated with the split from GE Vernova and GE Healthcare are now over, with an estimate of around $220M only remaining.

The company is also very financially secure, as it has a cash balance of $12.4B for a total borrowing of 19.6B in Q1 2025.

Συμπέρασμα

GE Aerospace is a giant in a profitable but also very technical niche: jet engine design and manufacturing.

As a pioneer of the industry, it is still ahead today when it comes to innovation, with fuel efficiency and acceptance of green fuels likely the next step after decades centered on increased performance.

Meanwhile, military aircraft are another source of income and essentially subsidize innovation for the rest of the company.

This does not mean that the company is without competitors or potential disruptors, like για παράδειγμα υπερηχητικά αεροπλάνα, or η άφιξη των κινεζικών αεροσκαφών COMAC στην αγορά (για τώρα μόνο στην Κίνα και την Ασία).

But as most of the existing aircraft fleets will require maintenance for decades, and new designs of aircraft are still mostly reliant on GE engines, the company is almost guaranteed to enjoy several more decades of a dominant position in the market.

As the troubles of the hyper-financialization strategy of the 2000s are now being left behind, the company is likely to keep innovating and stay a center of excellence in American manufacturing.

Τελευταία Νέα και Εξελίξεις για τις Μετοχές της GE Aerospace (GE)