GE sees jump in aerospace profits as historic breakup nears

General Electric expects profit in its aerospace business to climb in 2024, highlighting the potential earnings power of the world’s largest jet-engine maker as it prepares to become a standalone business.

GE Aerospace should produce as much as US$6.5 billion in operating profit this year, even as it takes on about US$600 million in costs as it becomes an independent company, GE said on Tuesday (Jan 23) in a statement announcing fourth-quarter results. That compares to about US$6.1 billion in operating profit generated by the jet-engine division in 2023.

The forecast offered the first glimpse of GE’s expectations for its soon-to-be-independent aerospace division and the GE Vernova energy-related businesses ahead of a breakup set for early April. The company’s huge jet-engine services business continues to hum along thanks to steady air travel, while the energy operations recover.

Chief executive officer Larry Culp said in the statement that both sides of the business would deliver “further revenue, profit and free cash flow growth” this year. The company expects GE Aerospace to generate more than US$5 billion in free cash flow and adjusted revenue growth of low-double digits or more.

Despite growth expectations, GE’s first-quarter profit forecast for the combined operations fell short of Wall Street’s estimates. The Boston, Massachusetts-based company said adjusted profit for the quarter through December was US$1.77 billion, compared with US$1.37 billion reported a year earlier.

GE’s shares slipped 1.8 per cent in early trading on Tuesday. The stock has soared 69 per cent over the last 12 months, far outpacing the S&P 500 Index’s gain of roughly 22 per cent in the same period. BLOOMBERG

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