GE Aerospace Adjusts 2024 LEAP Engine Forecast Amid Supply Chain Struggles

GE Aerospace

GE Aerospace has revised its LEAP engine delivery forecast for 2024 for the third time this year, projecting a 10% decline compared to the 1,570 units delivered in 2023. This downturn reflects ongoing supply chain challenges and operational bottlenecks among downstream customers.

Year-to-Date LEAP Performance

As of Q3 2024, GE Aerospace has delivered 1,029 LEAP engines, a 12% decrease from the same period in 2023. The most significant impact occurred during Q2, when raw material shortages and reduced production rates at airframers slowed deliveries. Although Q3 shipments rebounded by 23% quarter-on-quarter to 365 units, they remained 6.2% below the previous year's figures.

Despite these setbacks, total commercial engine deliveries, including the LEAP, rose 25% sequentially in Q3 to 501 units, though they were down 3.7% year-on-year. GE Aerospace aims to ramp up LEAP deliveries in Q4, aided by continued shipments to Boeing, which recently resumed production after a five-week work stoppage affecting its 737 Max program.

Challenges and Solutions in LEAP Production

The LEAP-1B engine exclusively powers Boeing's 737 Max, while the LEAP-1A serves Airbus' A320neo family. Production of the latter remains constrained due to shortages of high-pressure turbine (HPT) blades. GE Aerospace is addressing this bottleneck with a newly designed HPT blade, which is simpler to manufacture. The blade has entered production and is expected to be certified in the coming weeks, with larger-scale deliveries set to begin in 2025.

Strong Financial Results Amid Production Hurdles

Despite reduced LEAP deliveries, GE Aerospace raised its full-year operating profit forecast for 2024 to $6.7 billion-$6.9 billion, up from $6.5 billion-$6.8 billion in July. The company attributes this to strong demand for maintenance, repair, and overhaul (MRO) services, particularly spare part sales, and improved product pricing.

Quarterly profits surged to $1.9 billion, a significant increase from $333 million a year earlier, primarily driven by asset sales following its separation from General Electric in April. Revenue for the quarter grew to $9.8 billion, compared to $9.3 billion in the prior year.

Defense Segment Performance

Deliveries for GE Aerospace's defense engines increased by 8% sequentially in Q3 to 94 units but remained flat year-on-year.

With supply chain improvements and innovative solutions like the new HPT blade on the horizon, GE Aerospace aims to stabilize LEAP production and meet rising demand in the years ahead.