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Commercial Engine Shipments Down
Commercial engine shipments will likely decline 20-25% at GEAE
this year as the aerospace industry struggles with the downturn
in the wake of September 11.
"We expect at least another 20% decline in '03, and we've
pretty much dialed in those adjustments to our schedules,"
GEAE president & CEO Dave Calhoun told Show News.
However, this year's shipments might be down closer to 20% than
25% as shipments of the CF34 small commercial engines have held
up pretty well.
"Right out of the chute (after September 11) we were down
15% on parts and shop visit work, and that is beginning to come
back a bit. We expect it to be flat by the middle of this year then
resume some growth simply because people will fly the planes they've
got," said Calhoun. "Our installed base is pretty new
compared to the other guys, so retirements (to the desert) don't
hit us much. Really it depends on schedule frequencies, and if those
return, we could even see a little growth in parts and shop visits
by the end of the year, then back on track towards a 3-5 % growth
trajectory."
GEAE was on track for "a really good, solid double-digit
year" before September 11, and like everyone else it suffered
in the fourth quarter. But its momentum was such that it still finished
2001 with a 6% increase in both revenues and profits. The engine
business grew to $11.4 billion, and profits to $2.6 billion.
Calhoun said that one of his proudest achievements is that despite
the disruptions of the fourth quarter, GEAE came closer than ever
in meeting delivery requirements of engines and parts on the exact
day they were needed.
- John Morris
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With the long-range air strikes in Afghanistan and round-the-clock
fighter patrols over American cities, it is no wonder that
the military equipment is wearing out.
"Military business is great," said GEAE CEO Dave
Calhoun. "My biggest challenge is shipping enough stuff.
"The order books are good, appropriations look good,
we're just trying to meet their needs."
Almost every contract to be won in the foreseeable future
has been won (with the exception of NATO's AWACS). GEAE has
a development contract on the alternative engine for the Joint
Strike Fighter, and has won contracts to power F-16s for the
United Arab Emirates and Chile as well as providing the F414
engine for the F/A-18E/F fighter.
"We've just got to get the shipments out," said
Calhoun. "That represents healthy double-digit growth
through this year and next."
GEAE's business for military spare parts (excluding new engines)
passed $1 billion a year for the first time in 2001.
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"We haven't given any ground on our development programs
since September 11," says GEAE CEO Dave Calhoun.
"There are many risks we face over the course of the
year, but one we sign up for willingly and have a lot of confidence
in is the amount of development work for the future. Workforce
reductions don't affect it at all."
Current development programs include:
- GE90-115B.
- CF34.
- Joint Strike Fighter.
- GP7200 joint venture with Pratt & Whitney for the
Airbus A380.
- CFM TECH56.
"When you've got a bunch of developments like this
and an outlook ahead of you, it gives everyone confidence,"
according to Calhoun.
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