GE Hit by Steep Decline in Jet-Engine Business

By Thomas Gryta 

General Electric Co. posted a nearly $2 billion quarterly loss as revenue tumbled 24%, hurt by a steep decline in a jet-engine business that has been hobbled by the coronavirus pandemic.

The aviation business, once a profit engine for GE, swung to a loss in the June quarter as both revenue and orders plunged. The unit produces engines for Boeing Co. and Airbus SE planes but has had to cut production and jobs as airlines delay orders.

However, GE said it burned through less cash in the June quarter than it had previously warned. The company reported adjusted negative cash flow from industrial operations of $2.1 billion, compared with its projection of negative $3.5 billion to $4.5 billion in May. Analysts were expecting negative cash flow of $3.29 billion, according to FactSet.

"We're working through a still-difficult Covid-19 environment," said CEO Larry Culp, adding that he still expected a prolonged recovery for the commercial-aviation business. "Still, based on what we see today and the actions we've taken, sequential improvement in earnings and cash in the second half of the year is achievable."

GE also said it expects a return to positive cash flow in 2021. The measure is closely watched by investors after troubles in generating cash forced the company to slash its dividend and sell off business units.

The conglomerate has been revamping itself under Mr. Culp with a focus on cutting debt and generating more cash but has been hit hard by the coronavirus crisis, leading it to pull its full-year financial outlook in April.

On Wednesday, GE said it planned to sell its remaining stake in oil-and-gas company Baker Hughes Co. over three years.

Write to Thomas Gryta at [e-mail]

(END) Dow Jones Newswires

July 29, 2020 07:07 ET (11:07 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.