GE Aviation and CFM International, GE’s 50/50 joint company with Snecma of France, have announced that combined jet engine orders in China in 2007 surpassed more than 420 engines, adding to GE’s dramatically growing presence in the country. GE and CFM engine orders in 2007 in China are valued at more than $1 billion at list price, spanning engines for regional jets to jumbo jet airliners. The value of the GE engine backlog in China has grown to approximately $5 billion (list price).
Air travel growth in China, where 44 new airports are scheduled for construction in the next five years, continues to outpace airplane supply. In 2007 alone, domestic airline traffic grew by 18 percent in China, while international airline traffic grew 11 percent.
“In aviation, you establish very long-term relationships,” said Scott Donnelly, president and CEO of GE Aviation, headquartered in Evendale, Ohio. “In the past five years, GE Aviation has emerged as the leading engine supplier in China with a fast-growing support structure to handle these new fleets.”
Regional jet boom
In late December, Kunpeng Airlines selected 50 firm, 50 option ARJ21-700 regional jets from China’s AVIC1 Commercial Aircraft Co., Ltd. (ACAC). The ARJ21, powered by GE’s CF34 engine, is being developed for Chinese and export markets. To date, ACAC has firm orders for 85 ARJ21s, and sees a market for up to 850 ARJ21s in 20 years, representing a potential to GE of more than $4 billion in engine revenues. The aircraft’s first flight is slated for the first half of 2008.
GE has hosted more than 200 executives and middle managers from China’s AVIC 1 and the Chinese airlines for training courses at GE facilities in New York and Ohio. The training model, which includes a curriculum that focuses on HR, financial practices and governance, is unique to GE and has helped to deepen relationship in China.
Large aircraft sales continue strong
Clearly, the best-selling airliners in China are the single-aisle Airbus A320 and Boeing 737 families. CFM International powers more than 600 single-aisle Airbus and Boeing aircraft in service with Chinese airlines, and has nearly 400 more single-aisle aircraft on order. The CFM engine backlog in China approaches 900 engines.
While GE powers about 27 twin-aisle jumbo jets in the Chinese airline fleets, it has been selected for another 70 jumbo jets on order, including 44 787 Boeing Dreamliners with the GEnx engine.
Commitment to China
GE Aviation or CFM International now operate facilities in Beijing, Shanghai, Guanghan, and Xiamen. In addition, GE Aviation’s purchase of jet engine components in China reached $284 million in 2007, a 100 percent growth in three years.
GE began working with Chinese industry in 1910, when the first GE light bulb was produced there. Today, the relationship encompasses advanced R&D, including: a new facility in Shanghai; joint ventures in high technology industries such as medical systems, plastics and lighting products; and aircraft engine maintenance facilities, training, and component manufacturing.
GE has formed more than 30 different joint ventures and employs more than 9,000 people in China, representing a $1.5 billion investment.
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