“There is tremendous opportunity in aviation over the coming years, and the Board and I decided it is the right time for me to take on this expanded role,” said GE CEO Larry Culp.
General Electric (GE) – Get General Electric Company Report shares moved higher Monday after the it said CEO Larry Culp will take over the leadership role at the industrial group’s aviation unit.
The move, which will see current CEO John Slattery moving to the role of chief commercial officer in the business division, forms one of the key planks of GE’s plans to to split into three separate companies that it unveiled in December.
Slattery had been first identified as the Aviation division’s likely boss, and solid improvements in both orders, which grew 31% over the first quarter, and profits, which were up 42% at $908 million, appeared to cement that assumption.
Culp’s takeover will add to his portfolio of leadership roles in the company, which include group chairman and CEO as well as being tabbed as non-executive chairman of the developing healthcare group, which will be run by Peter Arduini when it is spun-off in 2023.
“GE Aviation is an exceptional business in growing commercial and military sectors that is shaping the future of flight,” Culp said. “There is tremendous opportunity in aviation over the coming years, and the Board and I decided it is the right time for me to take on this expanded role and work even more closely with the team to support our customers, meet the unprecedented demand ramp, and prepare for GE Aviation’s future as an independent public company.”
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GE share were marked 0.4% higher in pre-market trading immediately following news of the leadership change to indicate an opening bell price of $67.34 each.
GE said in December that it will spin-off its energy and power divisions in 2024 as they combined into a single group lead by Scott Strazik – alongside the new healthcare and aviation-focused companies.
Collectively, the separations will cost around $2.5 billion, GE said, when taxes and operational expenses are ultimately tallied.
Earlier this month, Culp said the industrial group is seeing robust demand from its customer base, but cautioned that supply-chain bottlenecks remain its most significant challenge.
Speaking to the Bernstein Strategic Decisions conference in New York, Culp said delivering products to customers is a much greater challenge than finding end demand, although price remains an “imperative” for companies around the world.
Culp added that the industrial group remains focused on cost cuts, with a $2 billion ‘gross cost out target’ for 2022, through “productivity, restructuring & sourcing actions,” according to a GE presentation.
Supply chain and cost pressures are likely to last into at least the second half of the year, GE said in March, noting that the “magnitude” of these challenges would pressure growth profit and free cash flow growth as well.