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GEAviation
2
Aviation
• Winning technology
• Deep domain knowledge
• Growing commercial installed base
– 1,747-a) deliveries in ’06
– ~2,100-b) deliveries in ‘07
• $40B commercial & military CSA backlog
• Strong track record of organic & inorganic growth
20%
17%
1H’06 1H’07
Revenue
SegmentProfit
$1.4
$1.6
$6.3
$7.6
Great business model
(a- 1,055 ‘06 deliveries CFM, 692 ‘06 deliveries GE(b- ~1,220 ‘07 deliveries CFM, ~830 ‘07 deliveries GE, ~12 ’07 deliveries EA
CFM is a 50/50 joint company between GE and SnecmaEA is a 50/50 joint company between GE and Pratt & Whitney
Business imperatives
($ in billions)
14%
14%
Ex Smiths
3
0 – 10%10 - 20%20 - 30%
China16%
Americas 5.0%
Europe 4.9%
Asia 4.5%(w/o India & China)
MEA18%
India20%
Industry strength continues
1H’07 revenue passenger mileage growth
4
Expanded Aviation portfolio
$3.8 $5.9 $3.5
(a- Includes GE’s 50% of CFMCFM is a 50/50 joint company between GE and Snecma
(b- Systems & Unison Engine Components on Smiths ’06 fiscal calendar
$0.8
Digital Systems Electrical Power Mechanical SystemsUnison Engine Components
$0.2 $0.8 $0.6
A leading aviation technology business
Commercial Engines
Commercial EngineServices
Military Engines & Services
’06 Rev
’06 Rev
–a)–b)
–b)
($ in billions)
Systems
5
Common core computing
Common core – remotedata concentrators
Leading/trailing edge actuators
Landing gear actuation &controls / brake monitoring
Nose gear steering controls
Flight deck interface /flight voice recorder
Flight datarecorder
GEnx
GE + Smiths – B787
Expanding capability “beyond the engine”
Smiths
• Innovative systems & engine components supplier
• Commercial, business & military segments
• Great technology & products
• Well-positioned for growth
GE
• Leading technology products
• Operational excellence
• Supply Chain management
• Project management
Synergy=+
• Top-line growth driven by B787, A380, B747-8 & JSF
• New channels & expanded services
• $300MM revenue & cost synergies by year 3
6
Walter Engines … small turbo-props
• 11+ Turbo-prop airframers outside US/W Europe
• 1,595 Walter engines in service … >30 a/c types
• 80%+ flying outside US/ W Europe
• Infusing GE technology to accelerate product development
• $100MM+ revenue in 5 years
DevelopedCountries
ROW
197
1,398
InstalledEngines
400 – 549 shp 550 – 799 shp 800 – 1.5k shp 2.3k – 2.8k shp > 2.8k shp
~100
~2,000
~3,400
~800~450
Total OEM Engine shipments ’07 – ’15
CurrentProducts
New products
7
Sikorsky CH-53K
Military … winning in a tough environment
• Global war on terror
• Aging equipment … operating &
maintenance cost up 2x in 10 yrs
• Must re-capitalize / modernize
• 3 to 5 year lead-time for
procurement funding
Environment
F110 (Turkey)
CH-53K (GE38)F414 (USN/Australia)
F136 (JSF)
�R&D benefits both commercial & military�Growing helicopter business … ~$1B annual revenue
8
Recent U.S. military funding $340MM
ADVENT(Advanced VersatileEngine Technology)
HEETE(Highly Efficient Embedded
Turbine Engine)
AATE(Advanced Affordable
Turbine Engine)
USAF
• $231MM demonstration focused on Var Cycle Tech
• Major advance in evolution
• of propulsion…Adaptive Cycle Engine (2012)
• Multi-mission flexibility & efficient supersonic flight
• $16MM Compressor Rig Test
• Next Gen compression system
• Lighter, smaller core
• Less fan/booster & LPT stages
• Cooled air for rear stage disks
• $93MM 4 Year Demonstrator Program
• Targeted for attack & utility helicopters
• 67% increase in Power SHP
• 25% improved fuel burn
• Potential SDD program in 2012
9
14,600
8,2004,300
21,900
4,600
12,600
Commercial engines Commercial installed base
Commercial outlook … strong
EA‘96 ‘06 ‘16F
GE
CFM
Fleet in active commercial serviceSource: ACAS, GE internal studies
GP7000 developed by GE/P&W Engine AllianceCFM is a 50/50 joint company between GE and Snecma
• Best-selling on regionals … 800 engine backlog
• Best-selling on single-aisle … 4,500engine backlog
• Best-selling on Boeing 787 … 630engine backlog
• Best-selling on wide-bodies … 2,250engine backlog
10
0
5
10
15
20
25
'07 '08 '09 '10 '11 '12 '13 '14 '15 '16
Materials stream … fueled by departures
CFM International is a 50/50 joint company between GE and Snecma
Annual departures* (MM)
Source: ACAS data and GE analysis
21% V
20% V
42% V
40% V
11
Growing service business
40+ Years
Parts and Services
7X
Design and testNew
engines
0
GE90
CF6
CF34
CFM
GEnx
GP7000
Key initiatives
• Delivering customer value- $39B commercial service agreement backlog
• Technology upgrades- Operating savings and improved residual value
• Build out diagnostics- Unique operational knowledge
• Reducing cost of ownership- More repair and used material
Engine lifecycle revenue
Average fleet age 8 years
12
Tech investment … family additions
*GP7000 developed by GE/P&W Engine Alliance**HF118 developed jointly by 50/50 JV between GE & Honda
Highest R&D commitment in history … $7B since 2000
’03 ’05 ’06
Total R&D
$0.9
$1.1
$1.2
($ in billions)
Boeing 777-300ER GE90-115B
Service ‘08
Service ’10
Service ’08
Boeing 787 GEnxAirbus A380 GP7200*
Service ’08
ARJ21 CF34-10
GE/Honda** HF120
747-8 GEnx
Service ’10Service ’10
Service ’09
13
GEnx … 950+ engine wins to-date
GEnx – powered 787 vs. previous generation
• 50% lower NOx* emissions
• 50% lower noise footprint**
• 20% fuel burn improvement
• > $1.3MM annual fuel savings*** per aircraft
Accepted in the market
GAP
*CAEP6 levels**Stage 3 noise requirements***Fuel @$2/gallon
14
• Fuel burn … ~20% better*
– Lightweight/composite structures
– Component technology
LEAP56TM is a trade mark of CFM, a 50/50 joint company between GE and Snecma
LEAP56TM … foundation for the future
•Maintenance cost … ~10% lower
– Lower parts count
– Longer life-limited parts
• Environment
– 60% lower emissions (NOx) than 2008 regulations
– 50% lower noise than current regulations
* Compared to CFM56 Tech Insertion (certified in 2007)
15
Aviation supply chain
GE’s plants Suppliers Partners
28 component shops
6 assembly and test sites
335 domestic
105 global
16
Strategic Investment Plan
TurbineAirfoils
Combustors
RotatingParts
Assembly& Test
Configs
Controls &Accessories
NacellesComposites
Structures
Partners
Need processcontrol
Strategic
Technology
Focused on turbine airfoils, rotating parts and composites
Spares/serviceOM opportunity
L H
H
Invest
Manage
Partners
Performance impact
17
Supply Chain … investment
Turbine airfoils
• Greenville plant
• Expanding … 3X
4.95.8
7.48.5
9.4
2006 2007 2008 2009 2010
Volume
(a - CFAN is a 50/50 joint company between GE and Snecma
Rotating parts
• West Jefferson
• Capital equipment
Composites
• Mississippi plant
• Operational ‘08
CFAN-a) expansion
• GE90/GEnx
• Blade volume … 10X
Investing ~$150MM+ annually
($ in billions)
18
Driving material efficiency
55
272
500
'05 '06 '07
Raw material focus
Nickel Titanium
Price($/lb)
Cost reduction… playing offense!!
'05 '06 '07
$78
$29
$9
Engineers appliedto cost reduction “Buy-to-Fly”
Cost reductionfunding ($MM)
From: 1 pc forging … 1878 lbs
To: 4 pc UEC welded rings … 1082 lbs
GE90-115B TCF
21
30 32
'05 '06 '07
7
11
17
'05 '06 '07
Price($/lb)
19
Lean
GE90 Assembly and Test
CFM56 Turbine Blade
3730
19
'05 '06 '07 YTD
Cycle Time (days)
• Material kitting
• Standard blocks of work
• Automated test setup
• Single piece flow lines
• Quick change tooling
• Robotics
42
29
'06 '07 YTD
Cycle Time (days)
20
Aviation summary
�Continuing to introduce new high technology products
– Improved fuel burn
– Lower maintenance cost
– Environmentally friendly
�Systems and engines for next generation wide and narrow bodies
�GE active in ~80% of $66B military funding activities (’07-’16) … continue capturing commercial benefits
�Develop adjacencies … integrate Smiths … Walter
Great business model