Embraer Commercial Chief Slattery To Lead GE Aviation

John Slattery, who has led Embraer’s Commercial Aviation business since 2016, will become CEO of commercial and military aircraft engine giant GE Aviation on Sept. 1, replacing David Joyce, who will retire, General Electric announced June 15.

Slattery had played a key role in Embraer’s planned merger with Boeing, which had agreed to buy 80% of the commercial operations of the Brazilian aircraft builder. But those plans were upended April 25 when Boeing suddenly walked away at the end, leading to speculation about Slattery’s future, as well for Embraer and even Boeing.

Despite growing friction between Embraer and Boeing over the breakup, GE chairman and CEO Larry Culp Jr. told Aviation Week in a June 15 interview that Boeing expressed support for the choice of Slattery to lead GE. “We were delighted to get the feedback that we did from our friends at Boeing relative to John and the prospect of John joining the GE team,” Culp said. “I don’t think there will be any negative impact on our relationship with Boeing.”

Slattery will take the helm of the Evendale, Ohio-based division as it struggles to recover from a precipitous drop-off in demand for new aircraft. “This is a time of unprecedented change in the aerospace industry, yet also an opportunity to reimagine the future of flight and how we can best serve our customers,” he said in a statement.

Slattery faces mounting issues in what was supposed to be the stable backbone of parent GE’s renovation. This year, as the novel coronavirus and lockdowns unfolded, GE Aviation has cut its workforce twice, with up to 25% pre-crisis staff let go. The division has unveiled more than $1 billion of cost actions and more than $2 billion of cash actions that will impact 2020, primarily in the second half of the year. At least a third to a half of the cost-saving measures, such as layoffs, will be permanent as the company looks to ramp up digital business operations, spokespeople said June 10.

“Not surprisingly, our commercial services business has experienced the greatest impact as airline customers take actions to conserve cash, such as parking aircraft while demand remains low or delaying engine maintenance until those engines are needed again,” GE representatives said in an investor update last week.

“We also expect these market dynamics will lead to hundreds of millions of dollars of charges related to our long-term service agreements,” they continued. “We along with many others in the aerospace industry expect that domestic travel routes primarily served by narrowbody aircraft will recover before international travel routes, which are primarily served by widebody aircraft.”

Meanwhile, as aircraft retire, operators will harvest and resell used parts from their engines, generating loads of new used serviceable material (USM). “Understandably, some worry that an influx of USM into the aftermarket will in turn have a negative demand impact for GE’s new spare parts,” GE Aviation acknowledged.

GE has not outlined expectations for a return to pre-pandemic levels of business for its aviation businesses. But asked if GE Aviation would remain the biggest part of the company, Culp said, “Yes, without question ... Everyone knows this is our biggest and best-performing business.” While 2020 is going to play out much differently than hoped due to the COVID-19 crisis, “a business of this size is really the engine that drives GE today.”

Commercial services business generated $15.2 billion of revenue in 2019; commercial engines business produced $9 billion. Military products generated $4.4 billion. While the equity ownership in CFM is split between GE and Safran, they recognize related aftermarket revenue and profit differently, depending on parts they provide. Separately, GE Capital Aviation Services (GECAS), the world’s leading lessor, organizes under the GE Capital division.

Prior to his job at Embraer, Slattery spent 15 years in the aircraft financing and leasing business and was co-founder of aircraft lessor RBS Capital Aviation, now known as SMBC.

An orderly handoff appears scheduled. Slattery joins GE on July 13 as president- and CEO-elect of GE Aviation. Come September, Joyce will move over to become non-executive chair of GE Aviation through the end of 2020, as well as remain GE vice chairman and an advisor to GE Research in that time. Then he will serve as a strategic adviser to GE Aviation “into 2021.”

Joyce had led GE Aviation for 12 years, mostly through good times until the recent COVID-19 crisis. Under his leadership, Aviation became GE’s leading business, doubling its revenue from $16.5 billion to $33 billion and swelling backlog from $26 billion to more than $270 billion. Not surprisingly, he was well regarded by investors and analysts on Wall Street.

During his time at GE, Joyce also played a key role in broadening the engine maker’s portfolio into new segments, deepening its technology base and developing a series of new commercial, business jet and military engine families. Well regarded as an “engineer’s engineer” within the company, he pushed GE’s strategy to embrace additive manufacturing and new materials, as well as future propulsion initiatives like more-electric propulsion and three-stream adaptive combat engine technology.

Joyce was also instrumental in GE’s selection by Boeing as an option along with Rolls-Royce to power the 787 with the GEnx-1B. Working with head of engineering Rick Stanley, Joyce and other engine leaders aggressively revised the design in the final weeks before submitting the concept and “emptied the kitchen sink” of new technology to improve the GEnx’s fuel burn. The engine beat out a bid from rival engine-maker Pratt & Whitney and is today the best-selling option on the 787.

Taking the helm of GE Aviation in 2008, one of Joyce’s first tasks was negotiating with Safran to extend the CFM partnership to 2040 and simultaneously launch the new technology LEAP family. He also oversaw the start of the eCore demonstrator, which would, among other engines, provide the basis for GE’s Passport business jet engine and the GE9X, the world’s largest turbofan for Boeing’s 777X. 

Under Joyce’s watch GE also has developed the GE3000 turboshaft, which as the T901, won the U.S. Army’s influential future helicopter engine. He gave the go-ahead to the Catalyst turboprop and launched the Affinity, the world’s first purpose-designed commercial supersonic engine. And, more recently, Joyce led the push to build bridges with Airbus and begin talks to potentially re-energize its relationship with the European A&D giant over engines for its widebody product line. The strategy, while still in its formative days, centers on possible GE-powered derivatives for Airbus A350s and is likely to become a key initiative for Slattery as the industry revival continues.

Joyce’s retirement after a 40-year career entirely at GE was long expected. Culp said finding Joyce’s successor was high on his list to do after Culp suddenly took over all of GE in October 2018.

Culp further stressed Slattery was on GE’s radar well before the breakup of the Boeing-Embraer deal, in part because Slattery was “a bonified leader and team builder” who had experience in commercial aviation. Said Culp, “It’s rare to have somebody that has been both a lessor and an airframer.”

Embraer Commercial Aviation chief commercial officer Arjan Meijer will replace Slattery as the new president and CEO of the division, effective June 15. Arjan will report directly to Embraer president and CEO Francisco Gomes Neto.