Services Driving GE Aerospace Revenue
EVENDALE, Ohio—Strong market demand and confidence in operational improvements has GE Aerospace projecting mid- to high-teen organic revenue growth in 2023.
The majority of its revenues comes from the aftermarket.
Services revenue represented 70% of GE Aerospace’s $26.8 billion revenue in 2022 and 89% of its $353 billion backlog of engines and services.
In civil aviation, “In terms of the post-pandemic return to flight and the expansion and modernization of fleets ... we couldn’t be better positioned,” GE Aerospace CEO Larry Culp says. At its March 9 investor day, Culp shows GE and CFM, its joint venture with Safran, as representing 41,000 of the 50,000 installed commercial engines and 26,000 of the 65,000 defense engines.
“On the military side, it comes down to one word: readiness,” he adds.
Given that services represents 70% of each sector’s revenue, “that’s why the service element of these businesses is so important,” Culp says.
In 2023, GE continues to focus on Lean and decentralizing the business, as evidenced by it breakout of energy, aerospace and healthcare businesses. Like last year, “we’re going to drive dramatic reductions in defects per engine within our manufacturing processes,” Culp says. “We’re going to meet the ramp up challenges” for both new engine production and the aftermarket, while “continue to drive productivity,” he adds. The “Lean toolkit” is a key element of how it will achieve this.
The CFM Leap-1A and -1B engines are an important part of GE Aerospace’s outlook. “The LEAP is clearly the major original equipment and services contributor to growth for us through the decade,” although the installed base of engines will be the “largest stable contributor of revenue,” CEO of GE Commercial Engines and Services Russell Stokes says.
While the Leap engines, which only share 10% common parts, have faced challenges, their durability is ahead of where the CFM56 program was at this point in life since entry into service, points out Stokes.