FARNBOROUGH, England - In a significant development for aviation, International Airlines Group (LON:ICAG) (IAG) has announced a commitment to purchase engines from GE Aerospace for six new Boeing (NYSE:BA) 787 Dreamliners destined for its subsidiary British Airways.
This move marks the first time British Airways will incorporate the GEnx engines into its fleet, expanding on a long-standing partnership with GE Aerospace.
The GEnx-1B engine, chosen for the Dreamliners, is a popular choice among airlines, powering two-thirds of the 787 aircraft currently in service. GE Aerospace highlights the engine's 1.4 percent fuel burn savings over its competitors for a typical 787 mission, emphasizing its performance and economic benefits.
Additionally, the GEnx engine is compatible with approved Sustainable Aviation Fuel (SAF) blends, aligning with the growing industry focus on reducing environmental impact.
IAG's decision to select the GEnx engines was influenced by the engine's track record of reliability and proven fuel efficiency. The GEnx engine family has accumulated over 56 million flight hours since its service entry in 2011 and stands as GE Aerospace's fastest-selling high-thrust engine, with nearly 3,000 units in service or on order, including spare engines.
British Airways' current fleet includes aircraft powered by various GE Aerospace engines, such as the GE90, CF34, and LEAP engines—the latter being produced by CFM International, a joint venture between GE Aerospace and Safran (EPA:SAF) Aircraft Engines.
GE Aerospace, with a global workforce of 52,000 employees, continues to be a leader in aerospace propulsion, services, and systems. The company boasts an installed base of around 44,000 commercial and 26,000 military aircraft engines, reflecting its significant role in the aerospace industry.
In other recent news, GE Aerospace has been making significant strides in its operations. The company has placed an emphasis on earnings and revenue, with a notable order from Japan Airlines for GEnx-1B engines to power its new fleet of Boeing 787-9 Dreamliner aircraft.
This continues a longstanding partnership between the two entities. GE Aerospace has also committed over $1 billion to expand its global Maintenance, Repair and Overhaul (MRO) facilities over the next five years, primarily to accommodate the demand for CFM LEAP engines.
CEO Larry Culp's contract has been extended until the end of 2027, following substantial restructuring, debt reduction, and cash flow increase under his leadership. In a significant restructuring move, GE Aerospace has finalized the spin-off of its energy segment, GE Vernova Inc.
Analysts, including Deutsche Bank (ETR:DBKGn), maintain a positive outlook for GE Aerospace and have adjusted their earnings estimates upward. The company is actively developing a hybrid electric engine in collaboration with NASA, aiming to equip narrow-body jets by the mid-2020s.
However, it anticipates that global supply chain issues will persist into the next year, affecting both the equipment and services sectors of the business.
InvestingPro Insights
As British Airways integrates GE Aerospace's GEnx engines into its fleet, GE's position as a key player in the Aerospace & Defense industry is further solidified. With a market cap of $176.51 billion USD, GE continues to demonstrate its financial strength and influence. Analysts have taken note of GE's strategic moves and performance, with 8 analysts revising their earnings upwards for the upcoming period, signaling confidence in the company's prospects.
GE's financial metrics underscore its robust performance, with a substantial revenue growth of 16.96% in the last twelve months as of Q4 2023. This growth is complemented by an impressive EBITDA growth of 78.05% in the same period, highlighting GE's ability to increase its earnings before interest, taxes, depreciation, and amortization—a key indicator of financial health and efficiency.
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The commitment from IAG and British Airways to GE's GEnx engines not only reflects the engine's efficiency and sustainability but also points to GE's ability to maintain a competitive edge in the market. With a price uptick of 52.57% over the last six months, investors are witnessing the tangible results of GE's strategic initiatives and its long-standing reputation in the industry.
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