GE Aerospace’s first-quarter profit estimates, stocks are up 4%
Trump administration CEO Culp advocates for priceless regime
The company expects tariffs to continue to exist, affecting spare parts sales in China
GE aims to reduce tariff costs through trade plans, surcharges
(Update stock price, CEO and analyst comments, paragraphs 4-13)
Rajesh Kumar Singh and Shivansh Tiwary
April 22 (Reuters) – GE Aerospace said on Tuesday it relied on price increases and cost controls to mitigate the impact of tariffs on its business as aircraft engine manufacturers reiterated their full-year earnings forecasts.
However, the Ohio-based company said its 2025 forecast does not assume Planemaker’s delivery schedule, further tariff escalations or changes in the global recession.
President Donald Trump’s trade war has created the greatest uncertainty for the aerospace industry, which is a colleague’s pandemic. There is little clear view of the behavior of consumers facing potentially worsening economic conditions, and some GE customers are working to accurately predict their business.
Scott Mikus, an analyst at Melius Research, said GE Aerospace’s decision to support its full-year forecast in an uncertain environment is a “win.” The company’s shares rose 4% in midday trading.
GE Aerospace CEO Larry Culp said the estimated tariffs will cost the company more than $500 million this year.
To mitigate the impact, it is making greater use of foreign trade zones and available trade programs, such as on-duty shortcomings. It also uses cost controls and tariff surcharges to protect its profit margins.
Kulp said he recently met with Trump and urged him to restore priceless regimes in the aerospace industry under the 1979 civil aircraft agreement. He attributes the industry’s decades-old tax-free status to create an annual trade surplus of $75 billion.
“We will continue to put this out with caution and hope that we can rebuild what we have before the recent tariff action,” he told Reuters.
Kurp said the government “understands” the company’s position. However, GE Aerospace expects tariffs to continue by the end of this year.
It said raising tariffs would bring additional costs to itself and its suppliers, warning of delays in backup engine delivery.
Now, it expects North America’s flight deviations (driven after-sales service business) to decline this year. The trade war is also expected to hit its spare engines and spare parts to China.
Culp said that while the company is closely following demand trends, the measures taken so far and a $170 billion order backlog will help it achieve adjusted revenue for $5.10 per share and $5.45 per share this year.
“There are a lot of unique things in GE Aerospace that we think will help us deal with the current headwind,” he said.
The company dominates the engine market for narrow body jets and enjoys a strong position in wide body. More than 70% of its commercial engine revenue comes from parts and services.
It reported adjusted earnings per share for the quarter was $1.49 as of March, with the average estimate for high-profile analysts at $1.27. The company’s adjusted revenue rose 11% to $9 billion in the first quarter. (Reported by Rajesh Kumar Singh in Chicago and Shivansh Tiwary in Bangalore; edited by Anil D’Silva, Chizu Nomiyama and David Gregorio)
