GE CEO Larry Culp on Tariffs, Supply Chain, and Future Engine Technology

Impact of Tariffs on GE Aerospace

• ✈️ GE Aerospace is experiencing a residual cost challenge of approximately $500 million due to US tariffs.
• 💡 The company is advocating for a return to the 1979 civil aviation agreement, which provided tariff-free trade.
• 📈 GE is exercising duty drawback options and implementing cost actions to pass on some of the residual costs to customers.
• 🗣️ The conversation with customers and investors emphasizes the need to mitigate these costs through operational improvements and price adjustments.

Supply Chain and Production Challenges

• ⚙️ GE is working to mitigate tariff impacts by improving its supply chain and managing costs.
• 🚀 The company is prepared for increased production demands from Boeing (targeting 60 narrow-body engines) and Airbus (targeting 75).
• 🔗 GE is actively identifying and resolving supply chain bottlenecks and building capacity to meet future needs.
• 📊 Despite complexities, GE has seen a double-digit increase in receipts from key suppliers compared to the first quarter, indicating positive actions.

Defense Contracts and Technology Transfer

• 🛡️ GE Aerospace is a significant US government contractor, supplying engines for two-thirds of the US combat jet and rotary craft force.
• 📈 The company anticipates growth opportunities from potential increases in the defense budget, particularly in R&D and next-generation combat systems.
• 🇨🇳 Regarding the Chinese market, GE acknowledges potential restrictions due to technology transfer concerns and national security, noting a rigorous export process.

Future Engine Technology

• 💡 GE is developing open fan engine architecture as part of its RISE technology program, focusing on propulsive efficiency for fuel savings.
• 🚀 This new architecture is expected to bring a step-change improvement in fuel efficiency in the latter half of the 2030s.
• 💬 The open fan concept is a focal point in customer conversations at IATA, signaling its importance for the next generation of aircraft.