donnelly farnborough 2006 v4[1] print - ge | imagination at work
TRANSCRIPT
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GEAviation
Scott C. DonnellyPresident & CEO
GE Aviation
GE Company Proprietary
“This document contains "forward-looking statements" - that is, statements related to future, not past, events. In this context, forward-looking statements often address our expected future business and financial performance, and often contain words such as "expects," "anticipates," "intends," "plans," "believes," "seeks," or "will." Forward-looking statements by their nature address matters that are, to different degrees, uncertain. For us, particular uncertainties which could adversely or positively affect our future results include: the behavior of financial markets, including fluctuations in interest rates and commodity prices; strategic actions, including dispositions; future integration of acquired businesses; future financial performance of major industries which we serve, including, without limitation, the air and rail transportation, energy generation, media, real estate and healthcare industries; unanticipated loss development in our insurance businesses; and numerous other matters of national, regional and global scale, including those of a political, economic, business, competitive and regulatory nature. These uncertainties may cause our actual future results to be materially different than those expressed in our forward-looking statements. We do not undertake to update our forward-looking statements.”
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GE Company Proprietary
Aviation industry is strong
Fuel ($ / Gallon)
Average
$1.46
$1.84
5.9%
5.3% 5.2%
1Q2005
Average
1Q2006
4.9%
ASKGrowth
RPKGrowth
ATKGrowth
FTKGrowth
Aircraft Orders(Airbus & Boeing)
266
1Q2005 1Q2006
188
Pax Capacity & Traffic Growth(1Q2006 over 1Q2005)
Cargo Capacity & Traffic Growth(1Q2006 over 1Q2005)
ASK RPK
ATK RTK
Sources: International Air Transport Association (IATA), US DOE, Airbus, Boeing
GE Company Proprietary
Aviation … business model
~70% of orders from non-US customers –b)
Everywhere in the world
GEnx … $7B ordered to-date
Differentiate with technology
OnPoint solutions … $35B backlog
Win lifecycle service
864 commercial deliveries YTD –a)
Grow installed base
(a- 520 YTD deliveries CFM, 344 YTD deliveries GE(b- 18% of non-US customer orders won by CFM International
CFM International is a 50/50 joint company between GE and Snecma
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GE Company Proprietary
Product lineage Commercial installed base (K)
1971 CF6
CFM1979
1992 CF34
1995 GE90
2008 GEnx
Next LEAP56TM
Source: ACAS, GE internal studiesGP7000 developed by GE/P&W Engine Alliance
CFM International is a 50/50 joint company between GE and SnecmaLEAP56TM is a trade mark of CFM International, a 50/50 joint company between GE and Snecma
Commercial engines … win with technology
2006 GP7000
EA‘95 ‘05 ‘15F
GE
CFM~16.5
~11.0
4.07.5
14.04.5
11.5
21.0
GE Company Proprietary
Invest in technology … grow installed base
1995 2005 2015F
25,000
15,000
10,000
5,000
0CFM PW RR IAEGE CFM PW RR IAEGE CFM PW RREA IAEGE
Source: ACAS, GE internal studiesCFM International is a 50/50 JV with Snecma
EA is a 50/50 JV between GE and Pratt & Whitney
CommercialEngines
20,0001,700 current
year adds(1,000 adds CFM, 700 adds GE)
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GE Company Proprietary
CFM56 … the world’s most popular engine
Highlights
• Longstanding JV with Snecma
• 1,162 in new orders through June ‘06
• Key orders at Air India, China Southern
easyJet, Indian Airlines & Southwest
• Certified latest CFM56 Tech Insertion
Focus
• Support … ~12,000 engines around the world
• Production ramp up … 1,000 engines per year
• LEAP56TM … define and validate technologies for future
CFM International is a 50/50 joint venture with SnecmaLEAP56TM is a registered trade mark of CFM
GE Company Proprietary
GE90 value … ask the airlines that fly it
Sources: 9/05 Air Finance Journal, GE Internal Study
Highlights
• #1 Widebody … investor & operators poll
• 22% more fuel efficient per seat, 16% lower seat mile cost
• In flight shutdown rate … best in class
• $2.1B in new orders through June ‘06
• Guinness Book of World Records … highest thrust
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GE Company Proprietary
Embraer 190
Bombardier CRJ705
CF34 … now a 70-110 pax game• CF34-10E early service reliability
excellent on EMB190
• EMB195 EIS at Flybe in October ‘06
• 500+ engines to be delivered to Embraer over next 3 years
• >300 CF34-8C powered CRJsand still growing strong
• CRJ700: -8C1 fleet upgrade delivering customer value
• CRJ900: more variants coming
GE Company Proprietary
CF6 … continued strong demand
• Middle of the market interim lift … 747-400bridge to 747-8
• $0.7B in new orders through June ‘06
• Key CF6-80E1 win at Jet Airways
• Customers recognize value & reliability
• Over 4,500 fielded engines … approaching 300 million flight hours
• Tech CF6 endurance engine on test
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GE Company Proprietary
• Leading with 72 GP7000 powered aircraft
• Significant hub to hub advantage … cost & capacity
• Certified December 2005 … A380 flight test 3Q06
• First Emirates ship set assembled & tested … performance better than spec
GP7000 certified … taking flight
GP7200 developed by GE/P&W Engine AllianceEA is a 50/50 JV between GE and Pratt & Whitney
GE Company Proprietary
ecomagination• 30% lower emissions (NOx) than previous state of the art
• Better than noise targets on all applications
• > $1.2MM annual savings per aircraft
• 15% efficiency improvement
GEnx … next generation technology today
$7B in engines ordered to-date
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GE Company Proprietary
• Fuel burn … 10% better
– Lightweight / composite structures
– Component technology
• Maintenance cost … 25% lower
– Lower parts count
– Longer life-limited parts
• Environment
– 60% lower emissions (NOx)
– Significant improvement in margin to acoustics regulations
LEAP56TM is a trade mark of CFM International (CFM), a 50/50 joint company between GE and Snecma
LEAP56TM … foundation for the future
GE Company Proprietary
Relative to Competitors’ engine applications
0
-1
-2
-3
-4
-5
-6
A330
-200
A330
-300
767-
300E
R
747-
400
777-
200
(5k
nm)
777-
200E
R(5
k nm
)
A380
-800
(6k
nm)
Del
ta B
lock
Fue
l (%
) -5.2
-1.4 -1.1-2.0
-3.2 -3.2
-0.5
787-
8
Aircraft CompanyData
Aircraft Company Published Report
Fuel burn … GE delivers the best in operation
-0.8
787-
9 (5
k nm
)
-1.2
3,000 nm route unless specifiedGP7200 powers the A380 & is developed by GE/P&W Engine Alliance
EA is a 50/50 JV between GE and Pratt & Whitney
GE
Adv
anta
ge
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GE Company Proprietary
Support … we build our reputation on it
• The commitment … keep ~7.5K GE & ~11.5K CFM engines flying
• The expertise …
- 150 field service engineers
- 4,000 GE engineers
- Full technical resources of GE
• The tools … Lean & Six Sigma
- Improving profitability & value
- Lowering cost of ownership
CFM International is a 50/50 joint venture with Snecma
GE Company Proprietary
Services evolution
• Build on growing installed base … up ~2X in 10 years• Growing customized service agreement portfolio … OnPoint• Expanding into engine systems … Unison
Products Services
30%
Products Services
60%
$6.1$11.9
‘95 ‘05
($ in billions)Revenue
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GE Company Proprietary
Fleet growing … despite cyclical market
CFM International is a 50/50 JV with SnecmaEA is a 50/50 JV between GE and Pratt & Whitney
Engine Deliveries
Engine Installed Base
’95 ’10F’05’00 ’15F0
500
1,000
1,500
2,000
0
10,000
20,000
30,000
40,000Fleet in Service
GE GE+CFM+EA
(GE+CFM+EA)
GE Company Proprietary
Grow services opportunities
40+ Years
Parts and Services
7X
Design and test
New engines
0
GE90CF6CF34
CFMGEnx
GP7000
Engine lifecycle revenue Average fleet age 8 years
CFM International is 50/50 joint venture with Snecma GE/P&W Engine Alliance is a 50-50 JV between GE and Pratt & Whitney
~40% of GE & CFM engines have not had first shop visit
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GE Company Proprietary
Customized service agreements
‘97 ‘05 ‘07F
• Evolve with customer needs– OnPoint … new offerings
– Reduce customer cost
CSA backlog ($B)
$40+
$9
$33
Emirates Air AsiaAlaskaRyanair Singapore
Frontier KLMFedExSouthwestChina
Southern
• Solid customer base …
• Win with growing carriers …
GE Company Proprietary
• Improved fuel burn
• Lower maintenance
• Lower noise & emissions
~2013+CFM56 Technology Evolution
CFM56-7
CFM56-5B/P
Gen 1& 2 Gen 3 Gen 4
Technology roadmap … customer value
CFM56-3 CFM56-5A
CFM56-5C CFM56-5B/3CFM56-7B/3
LEAP56
• Rotating composites
• High stage loadings
• Low emissions
• Advanced acoustics
1984
Infusing technology into previous generations via upgrade programs
CFM International is 50/50 joint venture with Snecma
Tech Insertion LEAP56
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GE Company Proprietary
Helping customers win … upgrades• Chosen by the world’s leading airlines
Customer Benefit
KLM EmiratesSouthwest
Air China Alaska Airlines
FedEx
China Southern Continental
• Continually developing new upgrades– 1999 … GE90 3D aero kit
– 2000 … CF6-6 turbine
– 2002 … CFM56-3 TOW kit, CF6-50 turbine
– 2003 … CF6-80A/C2 turbine
– 2005 … CF34-8 upgrade
– 2007 … CFM56-5/7 tech insertion, Tech CF6Savings over ~10 years
Maint. cost
Fuelburn
Residualvalue
Total cash
savings
~$1.1B
CFM International is 50/50 joint venture with Snecma
GE Company Proprietary
2005 Annual Revenue Passenger Mileage Growth
O – 10%10 - 20%20 - 25%
China16%
Asia - 6% (w/o India & China)
Europe - 6%
Americas - 7%MEA11%
India24%
Passenger growth … worldwide
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GE Company Proprietary
943
6,537
221 241
U.S.A. China India Brazil
0.3
1.3
1.1
0.2
Aircraft in service
Growth … now
• China ... 100 airplanes per year
• India ... 196* engines ordered ... 9 new airlines in ‘05
• Latin America ... new operating model ... GOL, TAM, COPA, Lan Chile
• Russia ... buying despite import duties
Emerging marketsPopulation (B)
*76 CFM engines … CFM International is a 50/50 JV with Snecma
GE Company Proprietary
Strong Commercial outlook
Revenues’03-’06
~10% AAGR
Services
Engines $2.2
$4.2
$3.1
$5.1
~$9.3B
‘03 ’06E’05
$8.1B
$6.4B$3.6
$5.7
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GE Company Proprietary
Military engines … win with technology
Fighters
1954
1960
1971
1980
1970
1979
1998
2011
J79
J85
TF34
F404
F101
F110
F414
F136
Transport / Tankers
GEnx
LEAP56
TF39
CF6-6
CF6-50
CF6-80C2
CFM56-2
Next
Next
1964
1968
1969
1985
1982
1997 CFM56-7
Turboshaft
1957
1964
2002
Next
1978
1988
1984
T58
T64
CT7-8
GE38
T700
CT7-9
CT7
GE Company Proprietary
Technology upgrades … customer value
• T700 upgrade for Apache & Blackhawk
- Materials and aerodynamics
- 400 of 5,700 engines delivered
- $2B opportunity
• Improves fleet performance
- 5% power increase
- 2X component life
• Funding plan defined
UH-60M Blackhawk
US Army engine transition plan
’05 ’10F ’15F
Flee
t Eng
ines
T700-GE-700
6,000
4,000
2,000
T700-GE-701
T700-GE-701C
T700-GE-701D
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GE Company Proprietary
F101 B-1B
CFM56-5B/-7 A320/B737NGService Life Extension
CFM56-2/3 B737
$1B USAF savings … $1.3B GE worldwide sales opportunity
CFM56-5A/C A320/A340
CommercialMilitary
Military & Commercial synergy … F110 SLEP
F110 F-16/F-15
F110 SLEP F-16
CFM International is 50/50 joint venture with Snecma
GE Company Proprietary
International markets ... significant growth
• Asia
– Korea … F-15, AEWC, T-50 trainer, Navy FFX
– Japan ... Emerging F-X program, utility helicopters
– India ... Fighter program, utility helos, maritime patrol
• Middle East
– Turkey ... Utility & attack helo
– Saudi ... Tanker, Apache, Blackhawk, maritime patrol
– UAE .... Tankers, trainers
• Europe
– UK, Netherlands, Italy ... F-35
– Spain ... NH90
– NATO ... Alliance Ground Surveillance (AGS)
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GE Company ProprietaryCFM International is a 50/50 JV with SnecmaSource: HeliCAS, MiliCAS, ACAS, GE internal studies
Invest in technology … grow installed base
15,000
10,000
5,000
GE RRPWCFM HON
1990 2005 2015F
GE RRPWCFM HON GE RRPWCFM HON
20,000
US MilitaryEngines
GE Company Proprietary
Services growth … expanding PBLs
Backlog ($B)• Improved fleet readiness
• Pay for performance
• Lean teaming with customer depots– Jacksonville– Corpus Christi– Cherry Point
• Enhanced asset utilization
• Commercial solutions for DoD
4X since ‘04
0.6
0.1
‘02 ’04 ’06E
2.5
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GE Company Proprietary
Revenues’03-’06
~6% AAGR
Services
Engines & Development
$1.6
$1.5
$1.9
$1.6
$3.5B$3.1B
‘03 ’06E’05
$3.5B
$1.8
$1.7
Drive installed base … expand services
GE Company Proprietary
• Invest in technology
• Grow installed base … focus on
departures
• Win in China, India, Middle East
• Expand services footprint
• Deliver customer productivity'04 '06E
Revenue
OP
$2.2
$11.1
$11.9
GE Aviation
'05
$2.6
~$12.8
~$2.9