JIM MCNERNEY, PRESIDENT AND CEO, GE AIRCRAFT ENGINES

On the Record with
JIM MCNERNEY, PRESIDENT AND CEO, GE AIRCRAFT ENGINES

GE and CFM won the majority of large commercial engine orders last year, taking 57% of the market for airliners capable of seating 100 or more passengers.

Their combined orders totaled 1,166 engines for firm aircraft orders, down from 1,499 the year before as the market flattened, and from 1,393 in 1997 and 1,498 in 1996.

CFM accounted for the majority of the 1999 tally, with orders for 986 CFM56 engines for Boeing 737, Airbus A320 family and A340 aircraft.

GE won orders for a total of 180 CF6 and GE90 engines. In addition, the GE90 was selected as the sole powerplant for the Boeing 777X.

CFM is a joint venture of GE and Snecma of France.

Asian carriers will be at the center of the launch of the new Boeing 777-200X/300X "and in the next month or two that will become obvious," predicts Jim McNerney, president and CEO of GE Aircraft Engines-which supplies the only powerplant offered on the new twin-engined airliner, the 115,000 lbs-thrust GE90-115B.

Launching the 777X is a major focus for GE, which is hoping the exclusive powerplant deal will help it catch up with Rolls-Royce in the 777 market. Rolls claims a share for that airliner of 44% -- or 168 firm and 80 option aircraft-versus GE's 112 firm and 21 options.

Asian airlines are expected to be major customers for the 500 new aircraft Boeing predicts it will sell. GE's exclusivity agreement on the 777X might well help it regain market share on existing models as airlines seek commonality in their fleets.

"I'm feeling very good about the launch process," said McNerney. "Everything we've learned as we talk to customers is that the 13% to 14% better seat mile economics on a derivative platform with a derivative airframe and derivative powerplants is a very, very attractive proposition. So I'm feeling very, very bullish on it."

GE is aiming to take the lead at the large end of the market, just as it has in single-aisle airliners with the hugely successful CFM56, manufactured in partnership with Snecma of France, and in the 50-100 passenger regional jet market with the CF34.

Last year GE Aircraft Engines won 57% of the market for airliners of 100-plus passengers, and reported its best results ever.

Revenues for 1999 were a record $11billion, of which one half came from Engine Services. "Operating margin grew in double digits; we had a very good year businesswise," said McNerney. "I feel very good about our market position and financial results."

This year GE is focused on developing its global services infrastructure-hoping to accelerate even more the growth in engine services, on developing the world's most powerful engine in the GE90-115B, and on delivering the CF34-8 to the regional airline market. It also plans a major infusion of new technology into the fleet of older CFM56 and CF6 engines in service with the world's airlines.

McNerney expects the CFM56 to continue as the world's best-selling engine (the 10,000th was delivered last year, and the backlog of orders stands at 3,000). But the CF34 could give it run for its money in the record books.

"Candidly the CF34 could end up selling as many engines globally as CFM over the next few years," said McNerney. "I think there's incredible growth there." The CF34 powers the Bombardier 50- and 70-passenger regional jets, the proposed Fairchild 728 family, and the forthcoming Embraer EMB-170.

"So at big end and low end we have a pretty good story that builds on the CFM business," McNerney added.

By John Morris

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