GE CEO Talks Company's Evolution

**SPEAKER_1** (0:02)
Bloomberg Audio Studios, Podcasts, Radio, News.

**SPEAKER_2** (0:07)
Right now, we're going to head back to Brazil to hear from the CEO of GE Aerospace, GE, of course, a major conglomerate that has split up and gone into pieces here over the last few years. Larry Culp is the CEO of GE Aerospace. Guy Johnson, our colleague from London, is in Rio for that interview. He joins us now. Guy, over to you.

**Guy Johnson** (0:24)
Thank you very much indeed. Yeah, Larry is here. Nice to see you, Larry. Thank you very much indeed for spending some time with us this morning. Let's talk about the here and now to start the conversation off.
And we're in a situation where we've got a war that's having an impact on aviation, it's having an impact on fuel prices. What impact are you seeing right now, a GE Aerospace as a result of what is going on?

**Larry Culp** (0:48)
Well, Guy, first of all, thanks for the opportunity to visit with you this morning. What we've seen really is nothing but a continuation of the strength that we saw through the first quarter of this year.

**Guy Johnson** (0:58)
Right.

**Larry Culp** (0:58)
It's interesting because we thought we might see some change in airline behavior, but we really haven't. I look at spare parts orders on a regular basis, we were up 30 percent in the first quarter. We've actually seen those spare parts.
Growth rates increased to 40 percent year over year. We've seen retirements tick down, we've seen engine removals, which are really a precursor to a shop visit, actually tick up at a rate faster than we can complete the shop visits currently. So what I think we see are airlines very focused on making the most of the summer, flying season, but also making preparations for the other side of the situation in the Gulf. Because the lesson we all took from the pandemic was things come back, they come back sooner, and they come back stronger than we would ever have anticipated.

**Guy Johnson** (1:45)
But you're surprised it's coming later. That I guess is the takeaway from this part of the conversation. You thought we may have seen it already.

**Larry Culp** (1:53)
I would have thought we would have seen a little bit of change in airline behavior, but we haven't seen that yet. So yes, surprised, pleasantly so.

**Guy Johnson** (2:01)
If you, when it comes and you start to see some effects of this coming through, does it start in the Gulf? Is there any hint at this point that maybe some of the Gulf carriers start deferring, start changing behavior? Is that where it begins and it spreads out?

**Larry Culp** (2:15)
Well, I think the airlines around the world are being impacted in different ways. So depending on where you are geographically, the market segment you serve, you're seeing different impacts or looming impacts on your business. We've seen a number of airlines that have adjusted their schedules over the next several months. So that's happening, but in terms of the interface that we have, again, both with respect to keeping the planes they have today in the air during this prize summer flying season, but also making preparation for the other side of the conflict.
The airlines really have not changed the way they are servicing today's fleets and preparing to expand and modernize.

**Guy Johnson** (2:55)
But where do you think it, what does it look like? When it shows up, what does it look like? When we get through the summer, we get into the fall, into the autumn, what are the early things that we, watching the aviation sector, looking for clues that things are maybe starting to slow down or there's an effect? What do I look for in the industry?

**Larry Culp** (3:14)
Well, what we're going to be looking for are those same indicators I mentioned earlier. What's happening with spare parts orders? What's happening with retirements? What's happening with engine removals? Are airlines in a position where they can't or have decided not to prepare for the other side? We were out a week and a half ago at an investor conference in New York, Guy, and what we basically reiterated is that in 2026, given what we see, we feel very good about our services growth coming in at a mid-teens rate, and our medium-term outlook, which has our impact for 2027
So I don't want to anyway suggest that nothing might happen, but from what we see right now, a hyper-focus on the near term and preparations for the other side.

**Guy Johnson** (3:59)
How do you get GE ready for that? What do you do? Are you getting it ready? Are you preparing for a storm?