General Electric is expecting deeper workscopes and more shop visits for its engine aftermarket business as the recovery takes hold, while also acknowledging ongoing significant strains caused by the pandemic.
Responding to an analyst’s question, GE chief executive H. Lawrence Culp said: “I think the expectation is that things will get better in terms of, not only, if you will, volume of shop visits, but scope or the value of a shop visit.”
The company expects CFM shop visits to peak after 2023, noting that more than 60% of GE and CFM engines are yet to have their second shop visit.
Its newest engine, the CFM LEAP, commands a backlog of roughly 9,200 units, despite 400 cancellations in the first quarter of 2021.
For the same period, GE reported a 36% drop in year-on-year profit for its aviation segment, which encompasses commercial and military engine and aftermarket sales.
Aviation revenue of almost $5 billion was down 28% on the previous year, driven by a 40% drop in commercial services revenue.
And while GE was encouraged by March departure data from certain parts of the world, and it also sees some relief in the aftermarket: for the ongoing second quarter GE expects about a 25% increase in shop visits versus 2Q 2020.
As of April 1, just over a quarter of the GE and CFM engine fleet was still parked. “Clearly, we're waiting for aviation to begin to snap back, that is an important swing factor for us,” said Culp.
“I don't think there's much of a historic whole precedent in that business given the way the pandemic is ravaging various parts of the world and, in turn, both leisure and business travel.”
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