GE has reported improved results for the second quarter ending June 30, 2021. GE’s total orders were up by 33% to $18.3bn, with total revenue up by 9% to $183bn.
GE Chairman and CEO H. Lawrence Culp, Jr. said, “The GE team delivered strong overall performance in the second quarter. Orders and revenue returned to growth, our operating margins expanded across all segments, and we generated positive Industrial free cash flow. Momentum is building across our businesses, driven by Healthcare and services overall, with Aviation showing early signs of recovery. Based on our encouraging cash results, we are increasing our full-year free cash flow outlook."
The aviation division reported orders of $5.5bn – an increase of 47% both reported and organically – as both commercial engines and commercial services grew significantly.
Aviation revenues of $4.8 billion were up 10% reported and organically, as commercial services was up 50% primarily driven by higher spare part shipments and shop visit volumes, partially offset by unfavourable non-cash long-term service agreement contract margin reviews.
Commercial Engines revenues increased slightly, while Military revenues decreased, driven by continued supply chain challenges.
GE also highlighted the approval of the AerCap acquisition of GECAS, which is describes as an important catalyst in the company’s transition to a “simpler industrial company”.
Culp continued: “GE is transforming to a more focused, simpler, and stronger high-tech industrial company. Our businesses are improving operations through lean, and with this solid foundation, we are driving more organic growth and investing in breakthrough technologies for our customers. The team is committed to innovating for a more sustainable world with leading positions in the future of flight, precision health, and the energy transition. With our focus on profitable growth and cash generation, I am confident we are well-positioned to achieve high single-digit free cash flow margins over time.”
Gross debt reduction following the AerCap close is expected to be more than $70 billion since the end of 2018, including a $7 billion debt tender in the quarter. GE reduced its backup credit facility to $10 billion from $15 billion. The company also continued to de-risk its pension, announcing a freeze in the U.K. beginning January 2022.
Also this quarter, GE launched CFM RISE, a new technology development program, aimed at reducing fuel consumption and CO2 emissions by more than 20 percent and ensuring 100 percent compatibility with Sustainable Aviation Fuels and hydrogen. GE also highlights its order from IndiGo Airlines for 620 CFM International LEAP-1A engines and associated spares with a multi-year service agreement.