FARNBOROUGH—GE Chairman and CEO Larry Culp expects the recovery of the aerospace supply chain to be a slow process, now that the industry is facing a rapid spike in demand for aircraft and engines.
“It may take 18 months for everyone to catch up,” Culp said on the sidelines of the Farnborough Airshow July 18. The issues are “not going to be solved overnight.”
Production increases at Airbus, Boeing and Embraer have been held back by delayed engine deliveries. “We are behind where we would have liked to be with Boeing and Airbus,” Culp admitted. The bottlenecks also affect airlines waiting for spare engines and slower than usual heavy maintenance turn-times.
Culp, who also serves as the CEO of the newly rebranded GE Aerospace, blamed the supply chain bottlenecks on “a wide range of underlying dynamics,” including shortages of materials and workers. He noted that demand for air travel has come back almost as quickly as it collapsed at the start of the COVID-19 crisis in early 2020.
“I don’t think I’ve ever seen a more challenging operating environment in my career,” Culp said. “We have no higher priorities than [removing] some of the bottlenecks.”
GE Aerospace itself is hit by the delays and productions halts of the Boeing 787 and 777X programs. President and CEO of Commercial Engine Operations Kathy MacKenzie said that “we are ready when Boeing is ready” to ramp up production of GEnx engines for the 787. The company is “still producing engines at a steady rate.”
Culp took over as CEO of GE’s aviation business just weeks before Farnborough and named his predecessor in the role, John Slattery, as the new Chief Commercial Officer. In the new role, Slattery is now tasked with focusing on defining GE Aerospace’s future product strategy, “a multi-dimensional chess game,” as Slattery puts it, as well as on other strategic projects including potential M&A activity. “John is in a different, but important role,” Culp said.
GE announced July 18 that it will rebrand its three business units into GE Healthcare, GE Vernova and GE Aerospace. The healthcare and energy units, to be spun off in 2023 and 2024, will retain the GE brand. GE Aviation will be renamed into GE Aerospace. “We are interested in growing where we bring value,” Slattery said. “[The rebranding] does open the aperture,” he added, but was not an indication of any imminent deals.
Culp made clear that GE is not intending to “replicate what others are doing,” referring to Raytheon Technologies and its engine unit Pratt & Whitney. “We may be in some businesses by the end of the decade that we are not in today,” he said.
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