New GE Aerospace Agreement

Melrose Industries PLC

06 November 2023

 

6 November 2023

                            MELROSE INDUSTRIES PLC

New GE Aerospace Agreement

Melrose Industries PLC ("Melrose") is pleased to announce that its GKN Aerospace Engines business has signed a major new agreement with GE Aerospace, the global aerospace engines market leader.

Background and scope

GKN Aerospace and GE Aerospace have significantly widened their long-term partnership with a new agreement that expands RRSP participation on the GEnx programme, the fastest-selling high-thrust engine. The new agreement also covers new technology insertion, aftermarket repair of high-volume engines structures, and production of fan cases for a range of GE engines.

Expanded RRSP on GEnx

GKN Aerospace's involvement in the GEnx RRSP has been extended beyond the current OE focus to include significantly greater participation in the aftermarket phase.  The GEnx engine is well proven and with a strong future order book.   GKN Aerospace will contribute further to GEnx aftermarket support in return for a greater share of life of program aftermarket revenues.  

Additional commercial agreements

As part of the agreement, GKN Aerospace will help to drive the GEnx programme towards its cost and carbon emissions reduction targets through contributing its new proprietary technology, particularly with additive fabrications.  GKN Aerospace will also join GE Aerospace's global aftermarket repair network, supporting GEnx with specialised repair content for complex structural components.   Finally, GKN Aerospace has also secured life-of-program contracts to deliver 100% of GEnx, CF6 and GE90 fan cases, as well as 50% of GE9X fan case assembly.

Financial implications

It is expected that the total incremental GKN Aerospace sales from this new agreement is estimated at around $5 billion over the full 30 year+ life of the GEnx engine.   The benefits will read through significantly in the medium term from GEnx aftermarket activities and as new GKN technology enters the GE engine fleet.  There is no material change to short-term guidance.

Next trading update

Melrose will announce its next trading update on Thursday 16 November 2023.

Simon Peckham, Melrose CEO, said:

"This agreement illustrates the unique breadth and quality of our business across the aerospace engines industry and its position as a technology leader. We very much look forward to deepening our relationship with GE."

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Enquiries:

Investor Relations: Chris Dyett [phone]

[e-mail]

Montfort Communications: [phone]

Nick Miles [phone] / Charlotte McMullen [phone]

[e-mail] / [e-mail]

 

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