Subsequent to last month’s indication from General Electric Company’s (GE’s) new CEO, John Flannery, that he was exploring the possibility of breaking up the company, sources are indicating that the sale of its industrial gas turbine business is being seriously considered.
The possible sale of the industrial gas turbine business, which would include the Jenbacher and Waukesha engines, has come about through last year’s 45 percent plummet in profits for the division. Sources, which have asked not to be identified, have confirmed that Citigroup Inc has been hired by GE to prepare a sale process for the business, though a GE spokesperson declined to comment on the matter.
Last November, Flannery had indicated the company would exit approaching US$20 billion in operations in an attempt to shore up its financial position as, over the last 12 months, its stock has lost half its value. The gas engine business could be worth as much as US$2 billion.
In January, GE disclosed that the U.S. Securities and Exchange Commission was investigating its accounting for part of its services backlog, and a set of actuarial calculations that caused GE to take a charge for long-term-care policies it underwrote a decade ago.
GE took a $6.2 billion after-tax charge on those policies in the fourth quarter and confirmed it will set aside $15 billion more in reserves over the next seven years to cover potential claims on the policies.
GE Aviation, a subsidiary of General Electric, is responsible for producing, among many others, the CFM 56 turbofan engine as a 50:50 partner with Safran Aircraft Engines, for which over 30,000 units have been sold, while a similar joint venture has seen the production of the new LEAP-X series of engines which will power commercial aircraft such as the Airbus A320neo Family, the Boeing 737, and the Comac C919.
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Mailing Address
AviTrader Publications Corp.
Suite 305, South Tower
5811 Cooney Road
Richmond, BC V6X 3M1
Canada