GE Hires an Outsider to Run Aviation Unit -- WSJ

This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (June 16, 2020).

The longtime leader of General Electric Co.'s (GE) large aviation division, David Joyce, is retiring from the jet-engine business, which is in the midst of a restructuring prompted by the coronavirus pandemic.

Mr. Joyce, a 40-year GE veteran who has run GE Aviation since 2008, will be succeeded by an outsider, John Slattery, an executive at Brazilian plane maker Embraer SA. Mr. Slattery, 51 years old, will join the company July 13 and take over as CEO of GE Aviation Sept. 1.

GE said in May that it would cut 25% of its roughly 52,000 global aviation workers amid a sharp drop in air travel and production cutbacks at its biggest customers. The unit, which entering this year was GE's largest and most profitable, makes engines for Boeing Co. and Airbus SE.

GE said Mr. Joyce had been eligible to retire for three years, but he delayed his exit as the conglomerate switched CEOs and then dealt with the grounding of the Boeing MAX jet, which runs on engines that a GE joint venture supplies. The company said the change gives Mr. Slattery a chance to shape the business as it restructures. Mr. Joyce, a GE vice chairman, will stay on as an adviser into 2021.

In an interview, CEO Larry Culp said the company "looked far and wide both inside and outside" to replace Mr. Joyce, who is 63 years old. "There is never an ideal time for a transition like this," he said.

GE's aviation business had $32 billion in annual sales last year. The company had been betting on steady profits from aviation to carry it through a restructuring of its power unit, which was wounded by a glut in the market for power-plant equipment. But the drop in air travel and jet production this year caused profits in the unit to fall 40% in the first quarter.

"Things are going to take a while to get better, but I'm not sure we are in the crisis we were in three months ago," Mr. Culp said Monday about the jet-engine unit. "We have a plan with how we are going to work through 2020."

Mr. Culp recently told investors the aviation division faces a "multiyear challenge" and projected GE to have negative cash flow from its operations in 2020, which he expects to reverse for 2021.

Mr. Culp highlighted Mr. Slattery's experience inside a plane maker and his previous work in the airplane-leasing industry. Mr. Slattery joined Embraer in 2011 and has run its commercial plane operations since 2016. The unit is focused on small regional jetliners and employs about 10,000 people.

Mr. Culp was the first outsider to take over GE when he was named CEO in 2018 and has brought in several outsiders to fill GE's leadership team. They include a new finance chief, Carolina Dybeck Happe, and the leaders of human resources, investor relations and the remaining digital business.

GE's profit plunged in recent years, prompting the company to slash its dividend, break itself apart and overhaul its management and board. The aviation business was until recently an exception, as it benefited from years of investments, including the launch of GE's most advanced engine to power Boeing's MAX program.

Write to Thomas Gryta at thomas.gryta@wsj.com


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