General Electric Co.’s top executive made a direct appeal to U.S. President Donald Trump as part of a broad push by the manufacturer to navigate the volatility stemming from the global trade war.
Chief Executive Officer Larry Culp spoke with Trump in-person earlier this month to explain how a “tariff-free regime” has benefited the aerospace supply chain and generated a trade surplus for the domestic industry. Culp said he’s “hopeful” the message got through.
“We are certainly supportive of the administration’s priorities around American competitiveness, revitalizing American manufacturing,” he said in an interview Tuesday after the company reported quarterly results. “We were advocating for, in effect, a reversion back to that tariff-free regime in both directions across the Atlantic.”
The meeting underscores the lengths that corporate leaders are going to ease the blow from tariffs that are upending global markets and complicating financial planning. Culp’s company, which operates as GE Aerospace, reaffirmed its full-year outlook on Tuesday, saying that cost controls and price increases were helping to offset a US$500 million impact from Trump’s tariffs.
The steady guidance offers a counter to other big aviation companies rattled by weakening consumer confidence and fears that the trade war could tilt the U.S. economy into a recession. U.S. airlines — key customers of GE’s jet engine business — have announced plans to reduce flying capacity and torn up their financial outlooks due to volatile trade policies that have made the broader economic environment nearly impossible to predict.
Investors are also concerned that new duties risk heaping additional pressure on the aerospace supply chain that could slow new aircraft deliveries by Boeing Co. and Airbus SE.
GE Aerospace, the world’s largest maker of jet engines, still expects adjusted full-year earnings of $5.10 to $5.45 a share, along with low double-digit revenue growth. The guidance takes announced tariffs into account, but it does not assume further escalation or a global recession.
The company’s shares climbed 2.8 per cent before markets opened in New York on Tuesday. The stock had gained about 6.9 per cent this year through Monday’s close, compared with a 12 per cent decline by the S&P 500 Index.
Earnings beat
Adjusted first-quarter earnings were $1.49 a share compared with the $1.27 average of analyst estimates compiled by Bloomberg. Sales were $9 billion, in line with analyst estimates.
GE Aerospace became a stand-alone company last year after Culp completed the spinoff of its energy-related units, which are now called GE Vernova. The multiyear turnaround plan has helped the company slash its debt load to roughly $20 billion. The moves have recently been rewarded by ratings upgrades from Moody’s Investors Service and S&P Global Ratings.
There are looming risks to GE Aerospace from the trade war between the U.S. and China. The Chinese government ordered its airlines not to take any further deliveries of Boeing aircraft, along with purchases of related parts and equipment, Bloomberg has reported. GE Aerospace supplies engines for planes including Boeing’s 737 Max and 787 Dreamliner.
Kiel Porter, Bloomberg News
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