((Automated translation by Reuters, please see disclaimer https://bit.ly/rtrsauto))
(Added CEO comments, company details, updated actions, paragraphs 4-5, 10-11) by Rajesh Kumar Singh and Abhijith Ganapavaram
General Electric GE.N’s aerospace arm on Thursday forecast operating profit of about $10 billion in 2028 thanks to robust demand for its products and services, and said it was targeting a first dividend payment at amount of 30% of net profit.
GE Aerospace, which makes engines for Boeing planes
BA.N and Airbus AIR.PA , has seen a surge in demand for after-sales services as a strong travel recovery and a shortage of new planes prompt airlines to keep planes flying longer.
“We’re really at a point where demand is not our challenge,” Larry Culp, GE’s chief executive, said at the unit’s investor conference. “And we think we have a lot of room to maneuver ahead of us
Shares of GE were up 2.9% at $164.07 Thursday afternoon. Shares have gained 30% since the start of the year.
Mr. Culp voiced support for Boeing CEO
BA.N , Dave Calhoun, who faced a crisis following a mid-flight panel explosion on a 737 MAX jet on January 5. He said GE had continued to deliver engines – which it produces through the CFM joint venture with French company Safran SAF.PA – at the same pace as before the incident.
GE Aerospace reaffirmed its 2024 targets and authorized up to $15 billion in share buybacks as part of its plans to return 70% to 75% of cash to shareholders.
More than 70% of the unit’s $24 billion in annual business engine revenue comes from services.
The company said customers wanted more engines and aircraft to be able to meet their continued growth and demand projections. However, meeting demand remains a challenge as the supply chain is not able to ramp up at the speed desired by the company.
“If our backlog extends into the 2030s, you know we have a lot of work to do,” Mr. Culp said. “And it’s a daily challenge
Boeing recently delayed a planned increase in production of the MAX, in part because of increased scrutiny from regulators. Mr. Culp said he had no plans to move Boeing’s production capacity to Airbus, adding that the company’s relationship with Boeing had “never been stronger.”
GE Aerospace said growth in LEAP engine deliveries in 2024 is estimated at 20-25% compared to last year, and the pace is expected to accelerate in 2025 and 2026. A company executive said that GE Aerospace expected to deliver more than 2,000 LEAP engines in 2025.
Once a diversified industrial conglomerate, GE said in 2021 it would split into three companies focused on aviation, healthcare and energy. GE spun off its healthcare businesses last year, and its energy and aerospace businesses will be spun off into independent companies on April 2.
GE Aerospace has been a cash cow for the Boston-based company, with some analysts estimating its market value at more than $100 billion after the split.
On Thursday, the unit reaffirmed its 2024 guidance of adjusted operating profit of $6.0 billion to $6.5 billion, free cash flow of more than $5 billion and growth rate at two or more digits of adjusted revenue.
In 2025, operating profit is expected to reach $7.1 billion to $7.5 billion, while adjusted revenue is expected to grow by double digits.
Mr. Culp said GE Aerospace will focus on merger and acquisition transactions that complement and accelerate its business.