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By Rajesh Kumar Singh
CHICAGO (Reuters) - General Electric on Tuesday warned that the growth in LEAP engine deliveries next year would nearly halve as its suppliers struggle to keep pace with a booming demand.
In an interview, CEO Larry Culp said the company is aiming for a 20% to 25% year-on-year increase in the engine deliveries in 2024, lower than a revised 40% to 45% annual growth this year.
Still, hitting the target will not be easy as it requires quarter-on-quarter improvements in the supply chain, he said.
"Our suppliers have work to do to continue to drive the sequential improvements," he told Reuters. "There's no silver bullet here."
LEAP engines, which GE produces in a joint venture with France's Safran, power the narrowbody aircraft of Boeing Co and Airbus. However, persistent shortages of labor and parts have left the company's suppliers hamstrung.
The company said supplier delinquencies shot up 25% in the third quarter from a quarter ago. It forced GE to trim the delivery growth target for LEAP engines this year by at least 5 percentage points and push out some of the deliveries into 2024 and 2025.
A slowdown in deliveries puts a question mark over plans at Boeing and Airbus to ramp up output. It is also a setback for airlines' efforts to modernize their fleets. Carriers are already dealing with the fallout of a rare manufacturing flaw in Pratt and Whitney's popular Geared Turbofan (GTF) engines that could ground hundreds of Airbus jets in coming years.
When asked if planemakers need to review their output goals in view of the persistent supply constraints, Culp said airframers would be "paced by their slowest, their weakest supplier."
To help ease the bottlenecks, GE has deployed its machinists and engineers at the facilities of its suppliers. Those measures have helped improve output and the problem is no longer broad-based.
But the demand for both aftermarket services and new engine deliveries is so strong that GE and its suppliers need to do more, Culp said.
"If we needed six of something per week from a certain supplier in the second quarter, that number probably went to seven in the third, goes to eight in the fourth," Culp said. "There's no simple solution here."
(Reporting by Rajesh Kumar Singh; editing by Jonathan Oatis)
