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The parent company of General Electric will be splitting into three different units with the current business being transformed into a unit focused on aviation.
On Tuesday, November 9, the US industrial giant General Electric Company (NYSE: GE) announced its split into three different companies. Each of these three separate units of General Electric will focus on energy, healthcare, and aviation.
GE plans to spin off the energy unit by early 2024 and the healthcare unit by early 2023. The recent decision to split comes amid the stock’s underperformance for years. However, the GE stock has gained 55% over the last year. Besides, the stock has also surged 2% on Tuesday despite the broader markets under pressure. In a statement following the announcement, GE CEO Lawrence Culp said:
“By creating three industry-leading, global public companies, each can benefit from greater focus, tailored capital allocation, and strategic flexibility to drive long-term growth and value for customers, investors, and employees. We are putting our technology expertise, leadership, and global reach to work to better serve our customers.”
As the other two units split, the existing General Electric will transform into an aviation-focused company. Over a century of existence, GE has witnessed multiple such transformations in the market. the company has cemented its positions as a leader in jet engines, power turbines, and appliances.
Under the recent leadership of Lawrence Culp, the company has been focused on streamlining operations. GE has also spun off and sold several units to simplify the business structure.
“We’ve made a lot of progress, not only with the balance sheet but improving our core operations, over the last several years. But I think as we’ve seen in so many instances outside of GE over the last decade, spinning good business heightens focus and accountability,” the CEO added.
The Path ahead for General Electric Aviation
As said the aviation arm of General Electric will exclusively focus on flight and jet engines. When asked about how this will affect the company’s operations in Dayton and across Southwestern Ohio, a GE Aviation spokesperson said: “While It’s early in the process, we are optimistic about GE Aviation, which will form the core of the aviation-focused GE of the future.”
Furthermore, in a LinkedIn post, John Slattery, GE Aviation president and chief executive, said:
“GE will become an independent, aviation-focused operating company focused on shaping the future of flight. As we look to our future, I continue to be humbled and inspired by GE Aviation’s past. I find myself reflecting on our history of innovation … the first turbojet engine, the world’s most powerful engine, powering the world’s largest commercial airliner, setting new standards for engine efficiency… the list goes on and on”.
GE Aviation is a big player in the aerospace hub. More than 150 smaller companies in this industry serve as contractors to this giant.