GE Aerospace Raises Profit Outlook Amid Declining LEAP Engine Deliveries

By Rajesh Kumar Singh and Shivansh Tiwary

(Reuters) – GE Aerospace raised its full-year profit outlook for the third time this year on Tuesday, but forecast a double-digit decline in LEAP jet engine deliveries due to supply constraints.

The company stated that demand for commercial air travel remains robust, yet material availability and supplier issues continue to disrupt production and delivery of equipment and services.

It sold fewer LEAP engines, which power Airbus and Boeing narrowbody aircraft, in the September quarter compared to a year ago. It now expects LEAP deliveries this year to decline by 10% from the previous year.

As a result, its shares fell about 5% in pre-market trade.

CEO Larry Culp noted that efforts to address supply chain constraints have improved material output from the previous quarter, but added that there is still more work to be done.

> "We're taking steps with our suppliers to increase inputs and within our own operations to expand capacity, ensuring we're positioned to meet this historic demand," Culp told analysts on an earnings call.

GE Aerospace stated that a strike by factory workers at Boeing has not yet had a significant impact on its revenues, earnings, and cash flows.

The company has begun shipping its 9X engines for Boeing's new jet, the 777X. Although Boeing has delayed the plane by a year, GE Aerospace expects to increase 9X engine deliveries next year, though the ramp-up may be slower than anticipated.

GE Aerospace holds a dominant share in the engine market for narrowbody jets and maintains a strong position in widebodies. More than 70% of its commercial engine revenue comes from parts and services.

A lack of new planes due to production issues at Boeing and Airbus has compelled airlines to continue flying older planes, resulting in a surge in demand for after-market services.

Strong demand for services, along with price increases, has helped GE Aerospace mitigate the impact of lower engine shipments and improve profits.

Consequently, the company has raised its full-year profit outlook for the third time in seven months, now expecting an adjusted profit of $4.20 to $4.35 per share for 2024, up from a previous forecast of $3.95 to $4.20 per share.

For the quarter ending in September, its adjusted profit came in at $1.15 per share, slightly exceeding the $1.14 per share expected by analysts in an LSEG survey.

GE Aerospace reported $8.94 billion in adjusted revenue for the third quarter, compared to the $9.02 billion anticipated by analysts.