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On the Record with
Dave Calhoun, President & CEO,
GE Aircraft Engines
General Electric pumped more than $3 billion
of cash into its airline customers to help them remain afloat in
the wake of September 11.
 "I'm not talking engine
deferrals. I'm talking $3 billion in direct investment. That's a
significant help with their liquidity issues and cash needs,"
GE Aircraft Engines president & CEO Dave Calhoun told Show
News.
Much of the help came from GE Capital through sale/leasebacks,
"and through our own use of the balance sheet here in the engine
business," Calhoun said.
"We don't do this willy-nilly. We have a lot of confidence
in the kinds of assets that our airline customers use; we're lending
against all those assets," he said.
"It's not for us that big a leap of faith, but for the capital
markets it's a tremendous leap of faith at this time, so we're one
of the few that can fill that vacuum.
"Are we giving the money away? No, no, no! Anyone that knows
GE knows that's not how we do it. On the other hand there was a
vacuum to fill, and when you're a big institution like we are, you've
got to step up."
GE Aircraft Engines reported a 6% increase in both revenues and
profits in 2001, despite September 11. The engine business grew
to $11.4 billion, and reaped profits of $2.6 billion.
While helping the airlines with their liquidity and cash needs,
GEAE also tripled the rate at which it is lending "Six Sigma
Black Belt" teams to its customers for them to utilize in any
form of process improvement. "Just at a time when everyone
was thinking 'You've gotta cut resources,' we tripled the number
of 'At the Customer, For the Customer' teams," Calhoun said.
Airline customers have reported to GE that the loan of Six Sigma
teams has saved them more than $400 million to date in improved
processes, without generating a dollar for GE. "It's an important
relationship step for us," said Calhoun.
But with typical candor, he added: "I also know that everything
we did is forgotten tomorrow. They're all still broke, they're all
still burning cash, so they need a whole new set of ideas. That's
always the challenge here. So we throw the resources at it as best
we can."
By John Morris
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Airlines have awarded GE Aircraft Engines a more than $24
billion backlog in short and long-term engine service contracts,
and that figure should grow at about another $2 billion a
year, GEAE CEO Dave Calhoun told Show News.
Airlines are finding GEAE's fixed price engine management
and maintenance guarantees more attractive as they try to
cut costs any way they can and increasingly outsource their
maintenance.
"It's not a floodgate, but clearly an uptick since
September 11," Calhoun said. "Over time we can deliver
a lot of value to these guys and that's what they need."
An engine tool of growing significance is Remote Diagnostics,
where airlines' engines are monitored by GEAE in real time
and any anomaly flagged by artificial intelligence software.
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The GE Remote Diagnostics services team is saving customers
time and money, says GE.
For example, on the CFM56-5C engine on an A340 aircraft,
the GE team identified a nacelle trend signature (temperature
decrease to 100°C, diverging from the other engines on
that aircraft) indicative of thrust reverser delamination.
Timely diagnosis prevented outstation removals and flight
cancellations-saving three airlines a combined total of $1.5
million.
Representative examples of other real events in which GE
Remote Diagnostics services played a critical role in saving
customers money include:
- The GE team identified a Full Authority Digital Electronic
Control (FADEC) fault one hour into a flight and notified
airline maintenance. The aircraft was recalled because there
was no maintenance support at the destination. GEAE assisted
in troubleshooting and determined that an engine control
unit change was required. This was done quickly and the
aircraft was redispatched, saving a long delay or cancellation
at the destination.
- The GE diagnostic team observed a sudden shift in exhaust
gas temperature (EGT) hot day margin and immediately provided
the customer with troubleshooting directed at the EGT harness.
At the next maintenance window, maintenance personnel confirmed
this concern and replaced a broken upper EGT harness. This
corrective action provided full recovery of lost EGT margin
and a substantial increase in time on wing.
- When GE identified sudden performance deterioration on
an engine, the airline inspected it, found a disconnected
bleed pipe and repaired the connection before further damage
occurred.
- When the GE team detected a dispatch-critical fault during
taxi and notified maintenance, the departure was stopped
and the aircraft recalled to the gate. After assisting with
troubleshooting and determining that a hydromechanical unit
change was required, a GE OnWing Support team dispatched
with the part to assist in the repair.
GE's value simulations using Six Sigma tools estimate the
financial impact from Remote Diagnostics services for a typical
airline to be $6 per engine flight hour for the engines and
an additional $1.50 EFH for the aircraft for a total of $7.50
EFH for the total aircraft.
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