MD&A
SEGMENT OPERATIONS | AVIATION
AVIATION
BUSINESS OVERVIEW
Leader: David Joyce
x Senior Vice President, GE and President &
CEO, GE Aviation
x Over 30 years of service with General
Electric
Headquarters & Operations
x
x
x
x
x
x
21% of segment revenues in 2015
23% of industrial segment revenues
31% of industrial segment profit
Headquarters: Cincinnati, OH
Serving customers in 120+ countries
Employees: approximately 45,000
Products & Services
Aviation designs and produces commercial and military aircraft engines, integrated digital components, electric
power and mechanical aircraft systems. We also provide aftermarket services to support our products.
x
x
x
x
x
Commercial Engines ± manufactures jet engines and turboprops for commercial airframes. Our commercial engines power
aircraft in all categories; regional, narrowbody and widebody. We also manufacture engines and components for Business and
General Aviation segments.
Commercial Services ± provides maintenance, component repair and overhaul services (MRO), including sales of replacement
parts.
Military ± manufactures jet engines for military airframes. Our military engines power a wide variety of military aircraft including
fighters, bombers, tankers, helicopters and surveillance aircraft, as well as marine applications. We provide maintenance,
component repair and overhaul services (MRO), including sales of replacement parts.
Systems ± provides components, systems and services for commercial and military segments. This includes avionics systems,
aviation electric power systems, flight efficiency and intelligent operation services, aircraft structures and Avio Aero.
We also produce and market engines through CFM International, a company jointly owned by GE and Snecma, a subsidiary of
SAFRAN of France, and Engine Alliance, LLC, a company jointly owned by GE and the Pratt & Whitney division of United
Technologies Corporation. New engines are also being designed and marketed in a joint venture with Honda Aero, Inc., a division
of Honda Motor Co., Ltd.
Competition & Regulation
The global businesses for aircraft jet engines, maintenance component repair and overhaul services (including parts sales) are highly
competitive. Both U.S. and non-U.S. markets are important to the growth and success of the business. Product development cycles are
long and product quality and efficiency are critical to success. Research and development expenditures are important in this business,
as are focused intellectual property strategies and protection of key aircraft engine design, manufacture, repair and product upgrade
technologies. Aircraft engine orders and systems tend to follow civil air travel and demand and military procurement cycles.
Our product, services and activities are subject to a number of regulators such as by the U.S. Federal Aviation Administration (FAA),
European Aviation Safety Agency (EASA) and other regulatory bodies.
GE 2015 FORM 10-K 49
GE 2015 FORM 10-K 49
MD&A
SEGMENT OPERATIONS | AVIATION
OPERATIONAL OVERVIEW
(Dollars in billions)
2015 GEOGRAPHIC REVENUES: $ 24.7 BILLION
ORDERS
Equipment
Services
2015 SUB-SEGMENT REVENUES
BACKLOG
Equipment
Services
EQUIPMENT/SERVICES REVENUES
Services Equipment
UNIT SALES
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GEnx engines are a subset of commercial engines
Commercial spares shipment rate in millions of dollars per day
SIGNIFICANT TRENDS & DEVELOPMENTS
x
Our digital industrial business is providing insights and operational value for our customers, unlocking opportunities to deliver more
productivity beyond our traditional services and EHFRPLQJDEHWWHUSDUWQHUDVZHZRUNRQVROYLQJRXUFXVWRPHUV¶WRXJKHVW
operational problems. Digital design tools, additive manufacturing, advanced automated machining, and advanced inspection, are
all enabling our operations, partners and suppliers to dramatically reduce cycle time while improving quality.
x
The installed base continues to grow with new product launches. In 2016, through our CFM joint venture, we expect to launch the
LEAP engine for application on the Airbus A320 NEO and the Boeing 737 MAX aircraft. In addition, we are continuing development
of the GE9X engine incorporating the latest technologies for application in the widebody aircraft space.
x
We expect military shipments to be lower due to continued pressure on the U.S. military budget but continue to work on next
generation science and technology programs related to engine propulsion.
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The reduction in fuel costs is expected to result in increased airline profitability and continued growth in passenger traffic and
freight.
50 GE 2015 FORM 10-K
50 GE 2015 FORM 10-K
MD&A
SEGMENT OPERATIONS | AVIATION
FINANCIAL OVERVIEW
(Dollars in billions)
SEGMENT REVENUES
SEGMENT PROFIT
SEGMENT PROFIT MARGIN
Equipment
Services
COMMENTARY:
2015 ± 2014
SEGMENT REVENUES & PROFIT WALK:
2015 ± 2014
Revenues
2014
$
24.0
Profit
$
5.0
Volume
0.1
-
Price
0.5
0.5
Foreign Exchange
-
-
(Inflation)/Deflation
N/A
(0.2)
Mix
N/A
0.2
Productivity
N/A
0.1
-
(0.1)
Other
2015
$
24.7
$
The increase in revenues was due to higher prices in
Commercial Engines and higher services volume, partially
offset by decreased equipment sales.
x
The increase in profit was mainly due to higher prices,
favorable business mix and higher cost productivity, partially
offset by the effects of inflation and lower other income.
2014 ± 2013
Revenues
$
21.9
Profit
$
4.3
Volume
1.2
0.2
Price
0.8
0.8
Foreign Exchange
-
-
(Inflation)/Deflation
N/A
(0.3)
Mix
N/A
(0.2)
Productivity
N/A
-
Other
0.1
0.1
2014
x
5.5
2014 ± 2013
2013
Segment revenues up $0.7 billion (3%);
Segment profit up $0.5 billion (11%) as a result of:
$
24.0
$
Segment revenues up $2.1 billion (9%);
Segment profit up $0.6 billion (14%) as a result of:
x
The increase in revenues was due to higher volume and
higher prices driven by Commercial Engines volume, spare
parts volume and the third-quarter 2013 acquisition of Avio.
x
The increase in profit was mainly due to higher prices in our
Commercial Engines and Commercial Services businesses
and higher volume discussed above. These increases were
partially offset by effects of inflation and negative business
mix.
5.0
GE 2015 FORM 10-K 51
GE 2015 FORM 10-K 51