GE Aerospace Faces Supply Chain Hurdles as It Revises 2024 LEAP Engine Delivery Forecast

Decline in LEAP Engine Deliveries Due to Ongoing Supply Chain Disruptions
GE Aerospace has once again adjusted its 2024 delivery forecast for the LEAP engine, now projecting a 10% decrease compared to the 1,570 units delivered in 2023. This marks the third revision this year, as the company continues to struggle with ongoing supply chain issues and production delays that have hindered its ability to meet delivery targets. The primary factors affecting production include raw material shortages, and operational bottlenecks at downstream customers who manufacture and assemble the engines into final products.

Performance in Q3 2024: Recovery and Challenges
As of the third quarter of 2024, GE Aerospace has delivered a total of 1,029 LEAP engines, which is 12% lower than the same period last year. The biggest hit to production occurred during the second quarter, where disruptions from material shortages and production slowdowns at airframers led to significant delays. However, the company saw a positive recovery in Q3, with deliveries rising by 23% sequentially, totaling 365 engines. Despite this rebound, the third-quarter delivery numbers were still 6.2% lower than in Q3 2023.

Turbine Blade Shortage and Production Solutions
The production challenges for the LEAP-1A engine, which powers the Airbus A320neo family, remain critical due to a shortage of high-pressure turbine (HPT) blades. This shortage has caused delays in engine assembly. In response, GE Aerospace has developed a new, simplified HPT blade design that is easier and quicker to manufacture. The new blade is already in production, and it is expected to be certified shortly, with larger-scale deliveries anticipated to begin in 2025, providing relief to the production bottleneck.

Financial Outlook Remains Positive Despite Setbacks
Despite the supply chain challenges and lower LEAP engine deliveries, GE Aerospace has raised its full-year operating profit forecast for 2024. The company now expects operating profits between $6.7 billion and $6.9 billion, an increase from previous estimates of $6.5 billion to $6.8 billion. This optimistic outlook is driven by strong demand for maintenance, repair, and overhaul (MRO) services, especially for spare parts, as well as improved product pricing strategies. In Q3 2024, GE Aerospace’s profits surged to $1.9 billion, a significant jump from $333 million during the same period in 2023, mainly due to asset sales after the company’s separation from General Electric in April.

Steady Growth in Defense Segment
While LEAP engine production faces challenges, GE Aerospace’s defense segment saw positive performance, with an 8% sequential increase in engine deliveries to 94 units in Q3. However, compared to the previous year, the segment remained flat in terms of year-on-year growth.

Future Plans and Optimism for Q4 2024
Looking ahead to the fourth quarter, GE Aerospace plans to ramp up LEAP engine deliveries, leveraging supply chain improvements and the newly designed HPT blade. The company is also bolstered by continued shipments to Boeing, which has resumed production of its 737 Max aircraft following a five-week work stoppage. The combination of these factors is expected to stabilize LEAP production and meet rising global demand in the coming years.