Next Boeing CEO to focus on long-term product strategy, GE Aerospace boss says

Global aviation industry-wide supply chain constraints 'to continue for at least this year and the next'

Larry Culp, chairman and chief executive of GE Aerospace, said the company could consider inorganic growth through acquisitions in businesses, such as avionics, if those opportunities arose at the right time. BloombergShow less

The new chief executive of Boeing will be a leader focused on dealing with operational challenges, culture changes and long-term product strategy well into the next two decades, according to GE Aerospace's boss.

GE Aerospace is also bullish about the outlook for its engine manufacturing and after-sale services, despite geopolitical and economic uncertainty, as travel demand remains robust, Larry Culp, the chief executive and chairman of the US engine maker, told The National on Saturday in Dubai.

Mr Culp was speaking ahead of Sunday's 80th annual general meeting in Dubai of the International Air Transport Association (Iata), where aviation chiefs will gather to discuss ways to navigate geopolitical instability, turn climate goals into reality and overcome pressures on growth from strained supply chains.

Mr Culp said that Boeing's board will prioritise strong leadership qualities during its continuing search for a chief executive.

"The board is clear-eyed in what they need: It's a big job, they're going to need a big leader. I think they're going to put a priority on someone that can work through the operational challenges they have, someone who is an excellent organisational and cultural leader.

"But all the while, somebody who would be very comfortable thinking through, not only the strategic but also technical, considerations required for the their product strategy, not just in the next couple of years, but over the 2030 to 2040 time frame," he said.

"It's one of the most important industrial jobs in the world and so I think they will look for someone who can check those boxes."

While some airline chiefs, such as the president of Emirates Tim Clark, indicated that Boeing's new leader should have a strong background in engineering to resolve the company's issues, Mr Culp said this was not a necessary requirement.

"I think someone that can check those three boxes could come from a number of different educational and functional backgrounds," he said.

Demand for future expansion and modernisation of fleets continues to remain robust

Larry Culp

Many industry watchers said that Mr Culp has the right qualities that the troubled US plane maker needs to rebuild confidence and turn around the company following a series of crises.

However, Mr Culp said he is focused on leading Ohio-based GE Aerospace as a stand-alone engine maker after the GE conglomerate split into three companies focused on health care, power and aviation. GE Aerospace launched as an independent public entity in April.

"I would simply say I'm flattered by those rumours but I'm very, very happy at GE Aerospace...there's a lot that we're going to do. I find it exciting, challenging and enjoyable, so I think for the foreseeable future you'll see me at Evendale, Ohio," he said.

777X delays 'not a concern'

Boeing is still waiting to win certification from the US Federal Aviation Administration (FAA) for its long-delayed 777X wide-body model, of which Emirates is a major customer, that will be the world's biggest aircraft when it debuts.

GE Aerospace's GE9X engine will be fitted on the aircraft, which is expected to enter into service by 2025, and Mr Culp said he is not concerned about delays on the 777X programme.

"The engine has been certified so what we're obviously really keen, as Boeing and Emirates and other customers are, is the certification for the aircraft itself... the delays are what they are. In the current environment everyone is doing the best they can to make sure that the authorities have the confidence in the aircraft that we all do," he said.

"We're there as their partner and as the sole provider under-wing...I try to worry about the things that we can control and as Boeing has indicated they're going to work that through with the FAA and we can certainly support that in a number of ways. We are where we are."

GE Aerospace is working "proudly and happily" with Boeing as they deal with safety and quality issues.

A Boeing 777-9, a variant of the 777X, performs a flying display at the International Paris Airshow at Le Bourget Airport. Reuters

Asked what GE Aerospace would like to see Boeing do differently, Mr Culp said the aircraft manufacturer is already taking "quite seriously" the safety and quality discussions with the FAA.

"There's a lot of hard work still ahead and they've acknowledged that and we're trying to do everything we can to be of service and support in that regard," he said.

"With time, they will demonstrate to all eyes that they are taking this seriously and they're making progress because no one out there wants to compromise on product safety, it's a solemn responsibility we all have and that is universally held at Boeing."

Continuing supply chain woes

The years-long aviation supply chain problems, ranging from delayed plane deliveries to shortage of parts and fewer skilled workers, that began during the Covid-19 pandemic is set to continue for at least the next two years, according to Mr Culp.

"The challenges are real and with demand increasing as it inevitably will over the next few years, I suspect we will be talking about these supply chain challenges for the foreseeable future: This year and next year, I suspect," he said.

Asked how the year of record presidential elections, two wars in Ukraine and Gaza, and inflationary pressures in some economies will impact business, Mr Culp said that while there is some uncertainty, people's appetite for flying remains strong.

"In terms of underlying demand in the near term...the industry is more than weathering some of the geopolitical dynamics. At the same time we see nothing but continued increases in the backlogs at the major airframers, so demand for future expansion and modernisation of fleets continues to remain robust," he said.

GE Aerospace launched as an independent publicly traded entity in April 2024. Photo: GE Aerospace

GE Aerospace's future

Following its spin-off nine weeks ago, GE Aerospace is now focused on supporting their airline customers as they recover and grow after the pandemic with faster engine turnaround time and time on wing - the period between maintenance visits, Mr Culp said.

About 70 per cent of the company's revenue is from engine after-sales services and while "those engines are important while they go out of the door, it's really the life-cycle support that is the essence of the business".

The company is also focused on fulfilling the "incredible backlog" of orders that airlines have placed with GE Aerospace's airframer customers, he said.

Asked if GE Aerospace would consider acquisitions that would turn the company into a broader aerospace supplier, Mr Culp said that while about 70 per cent of its available capital will return to shareholders as dividends and share buy-backs, it will have $2 billion to $three billion a year to invest in inorganic growth.

Culp said GE Aerospace is now focused on supporting their airline customers as they recover and grow after the pandemic with faster engine turnaround time. Bloomberg

"We're going to have plenty of strategic freedom to reinvest but we want to stay close to our core. We have this wonderful propulsions systems and services position, so we're not going to try to be all things to all people," he said.

"What we want to do is to look at anything that would strengthen our position in propulsion. That does not mean that we're going to acquire a major competitor but there are technologies or suppliers that makes sense for us to bring in here.

"We're going to look at some of our smaller businesses and in avionics and related categories--those could be opportunities for us to invest," he added.

Mr Culp's comments before the Iata meeting starting from Sunday to Tuesday in Dubai. This is the city's first time hosting the global event, underscoring its importance as a global aviation hub and home to Emirates Airline.

An influential airlines lobby group, Iata has 300 members from 120 countries who carry more than 80 per cent of the world's air traffic.