CEO Larry Culp On GE Aerospace’s New Start

Chairman and CEO Larry Culp’s transformation of the iconic General Electric from a troubled conglomerate into a focused aerospace and defense company culminated on April 2 with the creation of GE Aerospace. Sitting down in New York five days earlier with Aviation Week editors Joe Anselmo and Guy Norris, Culp looked forward to ringing the opening bell on the New York Stock Exchange and waved off speculation that he wants to work anywhere but GE Aerospace’s headquarters in Evendale, Ohio.

AW&ST: With criticism of the shareholder-first mentality in parts of the industry and problems at Boeing, there’s been a drumbeat about going back to prioritizing high-quality and safe products and taking care of the customer—and then the shareholder benefits from that. What is your playbook on business culture? 

Larry Culp: I think you just described it right. I don’t have all the history vis-a-vis Boeing, but in its simplest form, I think that’s how you take care of the shareholder. I’ve never been in a business where you could somehow swap out safety, quality, innovation and customer service and really serve the shareholder. During every one of our operating reviews, every plant tour, it’s safety, quality, delivery, cost—in that order. Not only do you serve the customer and take care of the team, but that’s how you take care of the shareholder.

JP Morgan analysts call you one of “the industry’s most successful leaders in recent years.” John Slattery, who still works for GE Aviation but was nudged aside as CEO, says you are “the finest industrial CEO in the world.” Bloomberg columnist Brooke Sutherland labels you “the most obvious choice” to succeed David Calhoun as Boeing’s CEO. Would you have an interest if Boeing asked? 

We’re going to ring the bell [at the stock exchange] on Tuesday, and then I’m going back to Evendale. It’s the first time in five years [at GE] that I’ll have one job, and it’s as good a job as I’ve ever had the opportunity to have. So that’s where you’ll find me on Wednesday. I’m pretty excited to go deep into this business.

Officials in the top echelons of the Pentagon are concerned about Boeing from a national security perspective. If the chairman of the Joint Chiefs of Staff or the president called you, that would be pretty hard to resist, wouldn’t it? 

I would tell them that Boeing is important to our country. I can best serve Boeing by being their best partner and their best supplier. You know how important what we do underwing is to Boeing. So GE Aerospace is important, too. The team I’m going to be on is in Evendale.

You recently launched GE Aerospace’s Flight Deck operating model. 

Flight Deck is really the framing of the next step of our lean transformation work. An investor asked me, “Larry, why did you talk about Flight Deck so much at the investor meeting? You’ve been here for five years. Aren’t you done?” It was all I could do not to laugh. We’re just getting started. It’s not only how we’re going to use Flight Deck to drive performance improvements. The real unlock is the cultural impact. Leadership behaviors of humility, transparency and focus are easy to talk about, but how do you really operationalize those ideas, especially where that maybe wasn’t prioritized, let alone rewarded? We’ve begun to make that more of a part of our culture, not just the PowerPoint slide we flashed at every other meeting.

Where are you in fixing Leap 1 durability and supply chain issues? 

We will get to CFM56 levels of durability—time on wing—by the end of the year, from a production perspective. The Leap 1A and the Leap 1B will follow. We’ll have work to do, obviously, with our friends in Seattle to lay that in next year. From a supply chain perspective, I think we’re making progress. But we just can’t make enough progress, be it a part or a shop visit for the CFM56 or even the Leap—or be it ramping up with Airbus, Boeing and everybody else. It’s just hard. I probably should be more positive because we are making progress. But I know that [Airbus CEO] Guillaume [Faury] and Dave [Calhoun] would like more from us. The airlines would like more. As for when—it’s a moving target. So, I think we’ve got easily a couple of years that I think we’ll be talking about this.

Would you consider easing terms in which suppliers aren’t paid for 120 days to help replenish the subtiers so they can make capital investments for ramping up production? 

We’re open to any good idea that would improve the dynamics within our supply base. There’s no question that with rates where they are, we’ve seen some suppliers challenged financially. But there also are a host of other issues we’re working with our suppliers on.

GE’s putting the “electric” into aviation, too, finally, with the NASA Electrified Powertrain Flight Demonstration project. Do you see that technology growing beyond regional aircraft sizes, particularly with hybridization? 

We are pushing the frontiers, because I think we really don’t know. It’s easy to be skeptical about how far those capabilities could be deployed on a single-aisle. But my attitude is: Be careful with that skepticism. We’ve seen so many industries disrupted because incumbents were complacent. Now I don’t think in this industry, given the cycles, somebody’s going to wake up one day [and be irrelevant]. But we want to make sure we’ve got room to bet on things that may well be high-risk, that we may flush in a year or two, simply to push the frontier and preserve the option or capability that we may need, even if we don’t have direct line of sight.

Do you see hydrogen propulsion as something that is now more realistic in the future? There’s a bigger focus on hydrogen in Europe than in the U.S. I’d put hydrogen in that same category. It may be hard to see it on a single-aisle in the foreseeable future, but I don’t want to be in the position where we ignore it.

On the GE-Safran Revolutionary Innovation for Sustainable Engines (RISE) program, where are you and how are the airlines and original equipment manufacturers responding to the prospect of an open fan? 

We feel good about where we are in terms of those building blocks. I think the airframer conversations—where we get into more detail about where we are—are similarly productive. Each airframer is going to shape their product road maps in part by what they see RISE being able to enable. If we really are going to meet the sustainability challenge in the mid-to-late 2030s, we as an industry are going to need a step function in propulsive efficiency.

The recent omnibus bill passed by Congress ruled out funding for an F-35 reengining, but GE welcomed additional money that will be put into adaptive engine work. Do you expect that funding will be directed to support the XA102 adaptive engine directly? 

I’m not sure we can answer that direct question, but we more than welcomed it. I was struck by the bipartisan nature of the support for the technology. Some people were coming at it relative to the mission requirements, others from an innovation and industrial base perspective. But regardless, I think there’s a view that this is a differentiated capability that the warfighter will need. Let’s keep going. That’s why I think you saw full-throated support for the technology developments.

What happens to GE’s fighter engine business if you lose the U.S. Air Force’s Next-Generation Air Dominance (NGAD) program? 

I don’t do well with hypotheticals. We’re going to do all we can to position ourselves with NGAD to prevail.

Maintenance, repair and overhaul (MRO) will be 70% of GE Aerospace’s business. Looking down the road, that sector looks robust, but is there anything you see that could disrupt MRO’s growth and prosperity? 

It really is the heart of the business model, and certainly the financial equation for investors. I think the near-term challenge [goes] back to supply chain. We’ve had quite a good run here. If we could get more product out, we’d be doing even better. The real risk is demand. As long as we continue to see growth in departures—I think we’re up 6% today versus last year—we’re going to have that moving target to chase in the aftermarket.

Analysts are predicting a peak in CFM56 engine shop visits next year. Are you able to handle that peak? 

Our intent is to handle it. But again, it’s really about the capacity that we’re trying to manage. I don’t want to sound like a broken record, but it’s a daily battle. The great part about where GE Aerospace sits in the industry is that it’s not one platform; it’s not just commercial. We have a vital role and are plugged into so many places from a propulsion perspective.

Does GE’s new start give you the freedom to consider bigger strategic moves as well? Do you feel unfettered now, or is it more dangerous? 

Both may be true. Back in 2018-19, there were some dire outlooks about our business, and while they were overblown, if anything had come along that was important strategically for us to consider, we couldn’t have. But now we can really look at anything that might make sense. We will have significant degrees of financial freedom. [After R&D and capital expenditures], you’re probably looking at $35 billion of available capital over the next three years. We’re going to put most of that back to the shareholders, but we are going to reserve the right to do a few things.