CF6/CFM56 Upgrade Could Save Carriers $1Billion

Singapore -- An upgrade program to infuse new technology into the world fleet of CF6 and CFM56 engines could unlock up to $1 billion in unrealized savings for their airline operators, according to Jim McNerney, president and CEO of GE Aircraft Engines.

Speaking to Show News just days after launching the upgrade program, he said airlines can benefit by extending life on-the-wing, improving fuel efficiency, and cutting landing fees in Europe by quieting their engines.

The upgrades are being offered by GE Engine Services, which in just two years has mushroomed from an after-sales support organization into the world's largest aviation services company, with more than 3,000 engines under long-term service contracts at more than 20 major airlines.
The company's Maintenance Cost Per Hour (MCPH) contracts are worth between $12 billion to $13 billion long-term, and generate more than $1 billion per year of Engine Services revenue, which last year hit $5.5 billion.

Selling new technology into older engines "is a major strategy," McNerney said. It fits in well with Jack Welch's vision that fully 75% of parent General Electric's revenues will be generated by service products by the end of the decade.

The first program involves upgrading CF6-50 and -6 engines with whole new systems, such as a new-technology compressor and advanced turbine materials. Cost will be between $200,000 to $800,00 an engine, depending on options. Other programs are already in the pipeline. A new compressor can improve fuel burn by 1.5% and reduce exhaust gas temperature by 15 degrees. The savings from the temperature reduction alone should translate into another year on wing.

The upgrades bring benefits, too, to GE Aircraft Engines.

"Your customer sees you are concerned about them; you're not just there every 10 years trying to sell them an engine," McNerney said.

"And these upgrades have value. We can sell that value and make some money ourselves."
Ironically, one of the biggest customers for the upgrades will likely be GE itself for the engines it manages for airlines under the MCPH program.

"This all reflects the value of having a services and a major engine business together, as the service business understands the problems inherent with the mature technology that's out there, and the engine business understands the potential of where it all can go," said McNerney. "With the organization we've put in we make sure that new thinking finds it way to the extent practical back into the installed base. There's an advantage to having a foot on either side of the river."

By John Morris