GE Engine Backlog Swells Past 15,000 Ahead of Jet-Output Boom

General Electric Co., sitting atop a record backlog of more than 15,000 engines, is prodding suppliers to be sure they can handle production that’s poised to surge to the fastest ever.

The efforts include periodically boosting demand on various partsmakers to prepare for a 17 percent jump in annual deliveries by 2020, according to GE Aviation Chief Executive Officer David Joyce. The business, which sells engines through the CFM International venture, could hand over 10,000 commercial units by 2020.

“We’ll build more CFM engines next year than at any time in the program,” Joyce said in an interview ahead of a briefing Monday at the Paris Air Show. “We’re obviously planning for it. We’ve got a very aggressive program to stress-test our supply chain.”

More than half of the orders are for the new, fuel-efficient Leap engine, which is set to enter service next year as Airbus Group SE and Boeing Co. start rolling out next-generation narrow-body models. GE Aviation is the parent company’s second-largest industrial business, making the Leap a critical product in GE CEO Jeffrey Immelt’s strategy to refocus on manufacturing.

Flight tests started last month on the A320neo powered by the Leap-1A. The plane, scheduled to fly commercially later this year, is also available with geared turbofan engines from United Technologies Corp.’s Pratt & Whitney unit. About 55 percent of A320neo customers that have chosen a power plant have opted for GE’s, Joyce said. A Pratt spokeswoman declined to comment on the order breakdown.

Rising Deliveries

GE, based in Fairfield, Connecticut, and partners could deliver about 2,810 commercial engines this year, a number that will reach 3,300 by 2020, the company said. Its total backlog, including parts and service contracts, rose more than 10 percent in the past year to $141 billion. That includes about 8,900 orders for the Leap.

“On the Leap side, all the lights are green,” Jean-Paul Ebanga, CEO of CFM, said in a briefing ahead of the air show. CFM is a joint venture with France’s Safran SA. “It’s the fastest commercial ramp-up ever in this industry.”

To keep up with the demand, GE has announced seven new manufacturing plants in recent years and renovated more than 1 million square feet (93,000 square meters) of existing factory space, Joyce said.

New Business

GE’s swollen order book may damp new-business prospects at the Paris show since customers will have to wait so long for fulfillment, said George Ferguson, an analyst with Bloomberg Intelligence. The international showcase, which alternates each year between Paris and Farnborough, England, draws manufacturers, airlines, lessors, suppliers and inventors for a flurry of meetings and dealmaking.

“There’s such a big backlog right now for narrowbodies, especially for GE-Safran,” he said. “We don’t see a lot of narrowbodies going out the door at the show because you’ll have to wait seven years to get it.”

Despite heavy demand on the commercial side, GE’s total engine deliveries may fall about 3 percent this year to 3,650 as declining military spending is affecting that part of the company’s business.

“If you talk about the military market, it is performing as planned,” Joyce said. “But the plan as a result of the Budget Control Act is one that has a reduction in engines as well as spare parts.”

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