By Rajesh Kumar Singh
CHICAGO (Reuters) -General Electric trimmed its growth forecast for LEAP jet engine deliveries for this year and said their growth would slow further next year as well, with the global aerospace supply chain continuing to struggle to keep pace with booming demand.
In an interview, CEO Larry Culp said GE is aiming for a 20% to 25% year-on-year increase in deliveries for 2024 - lower than a revised 40% to 45% annual growth for this year. The company had previously predicted 50% growth in 2023 deliveries for the engines widely used on Airbus and Boeing (NYSE:BA) medium-haul jets.
The company said the 2024 goal is based on expectations that the demand will come off a higher base. Still, hitting the target next year will not be easy as it requires quarter-on-quarter improvements in the supply chain, Culp said.
"Our suppliers have work to do to continue to drive the sequential improvements," he told Reuters. "There's no silver bullet here."
GE co-produces the LEAP engine - recently used on all Boeing and some Airbus narrow-body jets - with France's Safran (EPA:SAF) through their joint venture CFM International.
However, persistent shortages of labor and parts have left the company's suppliers hamstrung.
GE said "supplier delinquencies" or glitches shot up 25% in the third quarter from a quarter ago. That forced GE to trim the delivery growth target for LEAP engines this year by at least 5 percentage points and push some deliveries into 2024 and 2025.
A slowdown in deliveries puts a question mark over plans at Boeing and Airbus to ramp up output. It is also a setback for airlines' efforts to modernize their fleets. Carriers are already dealing with the fallout of a rare manufacturing flaw in Pratt and Whitney's popular Geared Turbofan (GTF) engines that could ground hundreds of Airbus jets in coming years.
GE has said it is aligned with Boeing and Airbus on demand for LEAP engines through the end of 2024. Culp reiterated that commitment, saying the company was working hard to deliver to the expectations of its customers.
Asked if plane makers needed to review their output goals in view of the persistent supply constraints, Culp said the manufacturers would be "paced by their slowest, their weakest supplier."
To help ease bottlenecks, GE has deployed machinists and engineers to the facilities of suppliers. The company says those measures have helped improve output and the problem is no longer broad-based.
But the demand for both aftermarket services and new engine deliveries is so strong that GE and its suppliers need to do more, Culp said.
"If we needed six of something per week from a certain supplier in the second quarter, that number probably went to seven in the third, goes to eight in the fourth," he said.
"There's no simple solution here."
CFM meanwhile issued an update on a hunt for unapproved parts affecting a small fraction of the fleet of the previous generation of engines known as CFM56.
It said 145 engines were affected by the suspected sale of falsely documented parts from a UK distributor, up from 126, and that more than half of these had been removed from service.