GKN Aerospace owner Melrose signs £4bn deal with GE Aerospace
GKN Aerospace owner Melrose signed a new $5bn (£4bn) deal with aircraft engine supplier GE Aerospace this morning, prompting shares to jump 4 per cent.
The new aftermarket services agreement will widen Melrose’s GKN Aerospace division’s current partnership with GE, surrounding its fastest selling high-thrust GEnx engines.
In a statement on the London Stock Exchange, the company said it anticipates GKN Aerospace sales reaching around $5bn over the 30-year lifespan of the GEnx engine.
The partnership will cover new technology insertions, aftermarket repair of high-volume engine structures, and production of fan cases for GE’s engines.
The FTSE-100 listed firm added that the GEnx, which is GE’s fastest selling widebody engine in its 100-year history, was “well proven” and has a “strong future order book”.
Simon Peckham, Melrose’s chief executive, 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.”
Melrose said it expects the benefits to “read through significantly in the medium term” as the technology enters the GE engine fleet, but that there would be “no material change to short-term guidance.”
The former turnaround specialist, now a pure-play aerospace group, is expected to announce its next trading update on Thursday 16 November 2023.
Shares in the firm have soared this year, up more than 70 per cent. In its first set of results since completing the spin-off of Dowlais group in April, the firm announced a £500m share buyback scheme and lifted its full-year profit expectations on strong margins in its engine division.