GE Aerospace CEO sees supply chain improvements despite tariff hit

CNBC

2 days ago

GE Aerospace's CEO said on Wednesday he is seeing supply chain improvements that will support an expected 15% to 20% increase in deliveries this year of jet engines used on popular narrowbody aircraft, after snags challenged deliveries in 2024.
CEO Larry Culp also told the Bernstein Strategic Decisions conference that the engine maker pledged to be "completely in sync" with customer Boeing, as the U.S. planemaker gradually grows production of its strong-selling 737 MAX to a monthly rate of 38 and possibly above this year. GE Aerospace, however, is still expecting a hit of more than $500 million from tariffs due to a U.S.-led trade war.
GE Aerospace holds a strong position in the narrowbody jet engine market through its partnership with France's Safran, which produces the LEAP engine used by both Boeing and European planemaker Airbus.
While the U.S. market has seen some turbulence in domestic travel due to economic uncertainty, about 70% of GE's commercial engine revenue is driven by parts and services which remain in demand as older planes fly longer.
Earlier this month, GE Aerospace signed an agreement with Qatar Airways to supply more than 400 engines to power the airline's next-generation Boeing 777-9 and 787 aircraft.
Helped by internal changes, Culp said GE saw a double-digit increase in deliveries from critical suppliers in April and May, with some delivering twice as much as they were doing a year ago.
"We're getting more and we're getting more in a predictable fashion," Culp said.
Supply chain challenges, nevertheless, continue to dog plane production as Boeing and Airbus manufacture more jets, with no one particular bottleneck to blame.
"A lot of people say, what's the one thing you need to solve for? I wish it was just one thing, right? It's 1,000 and it changes," Culp said.
Culp added that he is working alongside Boeing CEO Kelly Ortberg on GE's imminent engine deliveries, and how those will step up in line with Boeing in 2026 and in 2027. Boeing has engines in its inventory after output of its strongest-selling 737 MAX slumped last year due to a quality crisis.
"They're working their way through that inventory," Culp said of Boeing. "We want to make sure that we are completely in sync with them as we move forward."
GE Aerospace is holding its investor day at the world's largest air show in Paris on June 17.