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GE Chief Says Premature To Talk About 2025-26 Engine Supplies

The logo of Dow Jones Industrial Average stock market index listed company General Electric is shown at their subsidiary company GE Aviation in Santa Ana, California April 13, 2016.
Reuters

General Electric Co Chief Executive Larry Culp said on Thursday it was “premature” to talk about engine production volumes for 2025 and 2026, but dismissed speculation about a rift with planemakers on jetliner production plans.

Culp was speaking after GE said it was aligned with Boeing and Airbus on demand for LEAP jet engines through the end of 2024, adding that 2025 supplies were still being discussed as part of a standard process.

The stance of engine makers on production is widely watched because Europe’s Airbus, the world’s largest planemaker ahead of Boeing Co , has been struggling to win support from some suppliers for part of a record plan to increase jet output by 2026.

The end of 2024 is the cut-off point between the first phase of Airbus plans, in which output of narrow-body A320neo jets would rise to 65 a month from an estimated 45 now, and the second stage, which calls for a run-up to 75 a month in 2026.

Engine makers have, to varying degrees in the past year, voiced caution about the higher monthly target, while Airbus insists that strong demand supports the higher rate.

But Culp cautioned against reading too much into production talks as the industry focuses on pressing near-term issues.

“I think there is too much conspiracy theory and speculation going on,” he told reporters.

“I don’t think the fact that we’re not talking about ’25 and ’26 publicly suggests anything other than it’s probably at this moment premature to do so.”

Analysts say that after recent shortfalls, engine makers are anxious not to promise more than they can deliver until supply chains have returned to something closer to normal.

Financial shockwaves from the pandemic have also exposed deeper differences in the way planemakers and engine makers do business, exacerbating a tug of war between business strategies.

Even so, industry sources say engine makers have been steadily growing more comfortable with the higher production rates floated by Airbus and Boeing, following a series of airplane orders and some improvement in their supply chains.

One executive noted it is unusual for engine makers to make firm commitments to planemakers more than 18-24 months ahead.

GE’s partner in engine joint-venture CFM International, France’s Safran, has embraced plans to lift output of A320neo jets to more than 65 a month but held back from committing engine volumes for a further sprint to 75 a month.

CFM’s engines power Boeing 737 MAX jets and about half of Airbus’ A320neo family, competing with Geared Turbofan engines from Raytheon Technologies unit Pratt & Whitney.