GE Aerospace says CPP deal not a blueprint for broader integration

CHICAGO, Sept 17 (Reuters) – GE Aerospace does not see broad vertical integration as the answer to aerospace supply-chain constraints, Chief Financial Officer Rahul Ghai said on Thursday, after the engine maker agreed to buy castings supplier Consolidated Precision Products for $11.75 billion.

The company unveiled the CPP deal last week as it seeks to expand supplies of precision-cast metal parts used in jet engines, including turbine blades and vanes.

• Ghai called the CPP deal a “unique situation”

• GE believes it can improve CPP’s delivery performance, expand production and speed up the introduction of new airfoil technology

• “That’s not to say that we’re going to go vertically integrate every single part of our value stream,” Ghai told a Morgan Stanley conference

• Industry still needs to add manufacturing capacity in several areas, Ghai said, adding that the capacity squeeze was not going away quickly

• GEnx engine deliveries rose 50% from a year earlier in the second quarter, with GE expecting stronger year-on-year and sequential growth in the third quarter, Ghai said

• Airlines not altering their long-term fleet plans, Ghai said

• He said airlines were being more deliberate about fleet decisions after their experience during the pandemic, when quickly cutting capacity created challenges in maintaining market share

• GE expects the retirement rate for aircraft powered by older-generation CFM56 engines to be between 1.5% and 2% this year, down from a previous estimate of 2% to 3%

(Reporting by Rajesh Kumar Singh, Editing by Rosalba O’Brien)