GEAviationAviation
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GE Aviation ’06 Revenues
Other
Military Engines& Services
CommercialEngine
Services
Commercial Engines
2GE - Aviation
2007 Titanium MeetingSubject to the Restrictions on the Title Page
Commercial Engines
Military Systems Operation
Military … winning in a tough environment
• Global war on terror
Environment
• Aging equipment … operating & maintenance cost up 2x in 10 yrs
F110 (Turkey) F136 (JSF)
Sikorsky CH-53K
• Must re-capitalize / modernize
F110 (Turkey) F136 (JSF)
y• 3 to 5 year lead-time for
procurement funding
CH-53K (GE38)F414 (USN/Australia)
R&D benefits both commercial & military
4GE - Aviation
2007 Titanium MeetingSubject to the Restrictions on the Title Page
y
Customer solutions for growthCustomer Challenge GE OpportunityTop line budget pressure Legacy Operations &
Support - Diminishing supplementals upgradesSupport - Diminishing supplementals upgrades
Transformation Investment in rotorcraftTransformation Investment in rotorcraft- Smaller, more agile & technology demonstrators
Aging fleet Position for replacementsTankers, TACAIR, helos, humvees
Manpower reductions Performance Based Logistics' 115,000 6-yr. plan to drive productivity
5GE - Aviation
2007 Titanium MeetingSubject to the Restrictions on the Title Page
CommercialCommercial Engines
Commercial passenger demand is strong
Billions RPKs
…
240
260
280
2006eman
d
200
220
2000
2005
seng
er D
e
140
160
1802001Pa
ss
120
140
J F M A M J J A S O N D
7GE - Aviation
2007 Titanium MeetingSubject to the Restrictions on the Title Page
Industry strength continues1H’07 il th1H’07 revenue passenger mileage growth
India20%
MEA18%
20%
China
Americas 5.0%Europe 4.9%A i 4 5%
0 – 10%10 - 20%20 - 30%
16% Asia 4.5%(w/o India & China)
8GE - Aviation
2007 Titanium MeetingSubject to the Restrictions on the Title Page
0 10%10 20%20 30%
Aircraft utilization up equals more revenue Aircraft utilization up equals
4000
revenue Aircraft utilization up equals more revenue
3500
4000
es
3000Single-aisle
ual C
ycle
2500
Twin aisle
Ann
20001991 1996 2001 2006
Twin-aisle
S ACAS
9GE - Aviation
2007 Titanium MeetingSubject to the Restrictions on the Title Page
Source: ACAS
Since 2001 …
Labor productivity 33%
Sales and distribution costs 10%Sales and distribution costs 10%
Non-fuel unit costs 13%o ue u cos s 3%
GE - Aviation2007 Titanium MeetingGE Proprietary Information - For Internal Use Only
The headwind … fuel priceThe headwind … fuel price
2001 industry fuel bill … $43 billion 2001 industry fuel bill … $43 billion … 13% operating costs… 13% operating costs
2006 estimate … $115 billion2006 estimate … $115 billion2006 estimate … $115 billion
… 26% of operating costs
2006 estimate … $115 billion
… 26% of operating costsp gp g
11GE - Aviation
2007 Titanium MeetingSubject to the Restrictions on the Title PageGE - Aviation
2007 Titanium MeetingGE Proprietary Information - For Internal Use Only
2007 … a return to profitability worldwidene
pro
fit
$ 5
$2.5B
Tota
l airl
in
2006
2007E
-$3 2B
-$.5
2005-$3.2B
Source: IATA
GE - Aviation2007 Titanium MeetingGE Proprietary Information - For Internal Use Only
Order Book … growth
Engine Orders(50 Pax and above)
2 610
3,368
2,610
‘96-’00 Avg1,809
‘01-’04 Avg1,188
2005 2006
CFM i 50/50 j i t t ith S
13GE - Aviation
2007 Titanium MeetingSubject to the Restrictions on the Title Page
*GP7000 developed by Engine Alliance, LLC, a joint company of GE – Aviation and Pratt & WhitneyCFM is a 50/50 joint venture with Snecma
GE - Aviation2007 Titanium MeetingGE Proprietary Information - For Internal Use Only
Tech investment … family additions($ in billions)
Highest R&D commitment in history … ~ $7B since 2000
( )
Boeing 777-300ER GE90-115BService ’08 Service ’08
Total R&D Boeing 787 GEnxAirbus A380 GP7200*
Service ‘08
Service ’10Service ’09
ARJ21 CF34-10 747-8 GEnx
Service ’10Service ’10
’03 ’05 ’06 GE/Honda** HF120
14GE - Aviation
2007 Titanium MeetingSubject to the Restrictions on the Title Page
*GP7000 developed by GE/P&W Engine Alliance**HF118 developed jointly by 50/50 JV between GE & Honda
Commercial … win with technologyProduct lineage Commercial installed base
(K)1971 CF6
1979 CFM
1992
1995
CF34
GE90
2008 GP7000
2008
Next
GEnx
LEAP56TM ‘96 ‘06 ‘16F
15GE - Aviation
2007 Titanium MeetingSubject to the Restrictions on the Title Page
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
LEAP56TM is a trade mark of CFM International, a 50/50 joint company between GE and Snecma
96 06 16F
Production … another strong year!
2 0802,080
1,7591,759
‘06 ‘07
16GE - Aviation
2007 Titanium MeetingSubject to the Restrictions on the Title PageGE - Aviation
2007 Titanium Meeting
Production … Delivery, Mix, & Material
’0 ’0'06 '07’06
’07 6 76 7
’06 ’06
’07 ’076 7
’06
’07
*GP7000 developed by Engine Alliance, LLC, a joint company of GE – Aviation and Pratt & Whitney
CFM is a 50/50 joint venture with Snecma
Great first impressions … priceless
25
30
35 Operators with new airplane types
15
20
25
5
10
15
0777 747 A330 A320 737 E190 CRJ900 E170 CRJ700
New aircraft in service ’06 & ’07 … ~1,920
New customer experiences … 1,150
18GE - Aviation
2007 Titanium MeetingSubject to the Restrictions on the Title Page
p ,
Commercial Engines in 2007. . .
Aviation remarkably strong
Production volume will be at record levels
Product portfolio is solid
Our Customers have got to win
19GE - Aviation
2007 Titanium MeetingSubject to the Restrictions on the Title Page
AviationSupply Chain
August 2007
Aviation supply chainGE’s plants Suppliers Partners28 component shops
6 bl d t t it
335 domestic
105 l b l6 assembly and test sites 105 global
21GE - Aviation
2007 Titanium MeetingSubject to the Restrictions on the Title Page
Volume … Total Supply Chain Output
O th h i GE JSF GE38 GP7200 GE H d LEAP56
1994 2007 2010
On the horizon … GEnx JSF GE38 GP7200 GE Honda LEAP56
CFM, CFM56, LEAP56, and the CFM logo are trademarks of CFM International, a 50/50 joint company between Snecma and General Electric
22GE - Aviation
2007 Titanium MeetingSubject to the Restrictions on the Title Page
, , , g , j p yCompany
F136 developed by GE Rolls-Royce Fighter Engine TeamGP7200 developed by GE/P&W Engine Alliance
HF118 developed jointly by 50/50 JV between GE & Honda
Unprecedented Growth…
Requires…
• More Raw Materials
q
• More Castings
• More Machining• More Machining
• More Bearings
'06 '07 '08
• And More Titanium
23GE - Aviation
2007 Titanium MeetingSubject to the Restrictions on the Title Page
06 07 08
Accelerating new product launch
GEnx……0 – 100……19 months
24GE - Aviation
2007 Titanium MeetingSubject to the Restrictions on the Title Page
GEnx growth
500 (Engines) Fastest Large Engine
250
Ramp up in history250
02007 2008 2009 2010 2011
25GE - Aviation
2007 Titanium MeetingSubject to the Restrictions on the Title Page
2007 2008 2009 2010 2011
Growth strategy
• Investment
• Technology
•Lean
• Standardization
• Productivity26
GE - Aviation2007 Titanium MeetingSubject to the Restrictions on the Title Page
y
Supply Chain … investmentTurbine
airfoils• Greenville plant
Volume
p
Rotating parts• West Jefferson
Composites
2006 2007 2008 2009 2010
p• Mississippi plant
CFAN-a) expansion
27GE - Aviation
2007 Titanium MeetingSubject to the Restrictions on the Title Page
(a - CFAN is a 50/50 joint company between GE and Snecma
Managing Cost
28GE - Aviation
2007 Titanium MeetingSubject to the Restrictions on the Title Page
Material pressureConversionConversionNickel
$ lb
'04 '05 '06 '07
TitaniumSupply Chain
Cost
Material'04 '05 '06 '07
29GE - Aviation
2007 Titanium MeetingSubject to the Restrictions on the Title Page
Raw material … key Aviation demand
Annual usage (lbs)2007 2010
Titanium 7M 11M
Nickel 17M 27M
30GE - Aviation
2007 Titanium MeetingSubject to the Restrictions on the Title Page
Raw material focusNickel Titanium
PricePrice
'05 '06 '07'05 '06 '07
Cost reduction … playing offense!!Engineers appliedto cost reduction “Buy-to-Fly”
Cost reductionfunding ($MM) to cost reduction Buy-to-Flyfunding ($MM)
From: 1 pc forging … 1878 lbs
GE90-115B TCF
Driving material efficiency
'05 '06 '07'05 '06 '07
lbsTo: 4 pc UEC welded rings … 1082 lbs
31GE - Aviation
2007 Titanium MeetingSubject to the Restrictions on the Title Page
Driving material efficiency
Material options to titanium
HIGHCMC MAT’L
DESIGNED FORHIGH STRENGTH
HIGH TEMP
EIG
HT PMC MAT’L
DISPLACINGTITANIUM AT
HIGH TEMP
RE
NG
TH/W
E
TITANIUM USENICKEL DISPLACINGTITANIUM AT HIGHER
TEMPERATURES
TITANIUM ATLOWER
TEMPERATURES
STR
ALUMINUMUSE
FEROUS
TEMPERATURE
LOW
LOW HIGH
32GE - Aviation
2007 Titanium MeetingSubject to the Restrictions on the Title Page
GE Aviation 2007-08 Sourcing Strategy
Total Annual Spend
StrategyOpportunity
Continue Global Push…Asia/China Still Priority - Accelerate India
L A i ti G th d GELeverage Aviation Growth and GE Infrastructure Synergy
Sustain Raw Material Buffers to '03 '04 '05 '06 '07
Protect Supply - Plus On-going Capacity ChecksTotal Global
33GE - Aviation
2007 Titanium MeetingSubject to the Restrictions on the Title Page
'02 '04 '06 '08 '10
Global capacity … China
Xian Aero Engine
Smiths Suzhou2004 2006 2008
Smiths Suzhou
34GE - Aviation
2007 Titanium MeetingSubject to the Restrictions on the Title Page
2004 2006 2008
Global capacity … Europe
Rotating partsF b i t d A bli
Turkey
Fabricated Assemblies
Major Product Lines: jF110, CFM56, CF6, CF34, GE90, GEnx
R i
Combustors
Romania
Major Product Lines: CFM56, CF34-3, CF34-8, CF34-10
35GE - Aviation
2007 Titanium MeetingSubject to the Restrictions on the Title Page
Supply chain summary
Tremendous growth
Investing in capacity
Strong focus on productivity• Material … “Buy to Fly”
Delivering on customer expectations
36GE - Aviation
2007 Titanium MeetingSubject to the Restrictions on the Title Page
Summary
• Tremendous Business Cycle that has some breath
• Need to keep material lines healthy
• Outlook for titanium from an engine perspective looksOutlook for titanium from an engine perspective looks strong
• Must continue to drive cost Alternatives are available• Must continue to drive cost …. Alternatives are available
• Counting on your continued support to do the right thing for the Buy America Act
37GE - Aviation
2007 Titanium MeetingSubject to the Restrictions on the Title Page