On the Record with
DAVID L. CALHOUN, PRESIDENT & CEO, GE AIRCRAFT
ENGINES
One Down and Three to Go for Alliance
Air
France, Federal Express and Lufthansa. Those are the three operators
GE Aircraft Engines is aiming for as launch customers for the GE-P&W
Alliance GP7000 powerplant for the giant Airbus A380.
"We must win two out of those three, hopefully all three,"
GE Aircraft Engines president and CEO David Calhoun told Show
News.
Having won Air France, Calhoun is no less aggressive about the remaining
two. But he is untypically reticent when asked what he's prepared
to do to prevent another Rolls-Royce victory with the Trent 900
(which was selected in the first three A380 competitions by Singapore
Airlines, Virgin and Qantas).
"We probably lost the first few due to commercial terms,"
said Calhoun. Asked if he meant discounts, he replied: "I'll
never know what the numbers are, but I can tell you it's at least
90%. That's a big number.
"We, too, have to be aggressive to launch a program, we thoroughly
understand that. We have done it before and we will do it again.
On the other hand we don't do things just for the fun of it, we
do it to make a dollar. We're not going to do things that damage
the rest of this franchise. It's that pure and simple."
Calhoun sees the business outlook for 2001 as pretty good, with
growth probably in the upper single digits, and earnings better
than that. Revenues in 2000 approached $11 billion.
"We are really beginning to realize operating efficiencies,"
he says, "after acquiring so many things and expanding our
businesses so fast in the last 12 months."
The commercial engine business has seen no impact yet from the economic
slowdown, and Calhoun does not expect any until the second half
of next year. GE's installed base-a powerful generator of business
for spares and services-is growing at 8% to 9% per year and will
continue to do so as more GE-powered aircraft are delivered. "Our
installed base should exceed Pratt & Whitney's this year,"
says Calhoun. "That's a big deal. It's a 50-year change.
"It takes a long time to turn those lines around. You just
become in awe of the cycle times and development time necessary
to change a lot of these market dynamics," Calhoun explains.
Military business remains strong for GE. Increased readiness in
the U.S. military has resulted in strong double-digit growth in
military spares, which will soon be a $1 billion a year business
for GE.
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