2 Factors Driving GE's Aviation Business
NEW YORK (Trefis) -- General Electric's(GE) aviation arm GE Aviation is one of the biggest manufacturer of aircraft engines in the world along with peers like Pratt & Whitney and Rolls Royce. It manufactures jet engines for both small and large commercial and military aircraft.
Widely known for its innovation and technological excellence, GE complements its engine manufacturing skills by providing clients with a wide range of services offerings for GE and CFM engines in service. We believe GE is well positioned for continued success in this segment given the robust outlook for emerging markets and its global network of suppliers that is unrivaled by its peers.
See our full analysis of the General Electric stock here.
GE Aviation has shown impressive numbers in the last quarter as its revenue for the quarter reached $4.9 billion driven by a 2% increase in volumes. The firm also received orders worth $6.9 billion, an increase of 18% over the corresponding previous quarter.
The company has now an equipment backlog of $23 billion, up by 7% while its services backlog went up by 12% compared to previous quarter. The company's profit growth was however not very impressive as the growth in volume and value was offset by higher cost of R&D and new product launches. However, going forward, we feel this division has high growth potential as the macro trends are favorable and all that is needed is good execution.
Air Travel Demand from Emerging Markets
The entire aviation industry is keeping a close watch at emerging markets where air travel demand is growing at double digits. Countries like China, India, South East Asia, Africa will provide the next wave of growth for commercial aviation.