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GE CEO Culp expands role to head aviation unit

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© Reuters. FILE PHOTO: General Electric Co. Chief Executive Officer Larry Culp mingles with shareholders at the company’s annual meeting in Tarrytown, New York, U.S., May 8, 2019. REUTERS/Alwyn Scott/File Photo

By Rajesh Kumar Singh, Tim Hepher and Abhijith Ganapavaram

(Reuters) -General Electric Co said on Monday Chief Executive Larry Culp will also head its aviation unit effective immediately, replacing John Slattery, as the industrial conglomerate prepares to split into three public companies.

Slattery, who has been at the helm at the company’s jet-engine unit since Sept. 2020, will become the unit’s chief commercial officer.

GE also named Otis Worldwide (NYSE:OTIS) Corp executive Rahul Ghai as GE Aviation’s new chief financial officer. Ghai played a key role in steering Otis following its breakup from United Technologies (NYSE:RTX) in 2020.

GE plans to spin off its healthcare business into a separate publicly traded company next year. It would combine its power and renewable energy units, and spin off that operation in 2024. Following the split, it will become an aviation company, headed by Culp.

John Walsh, an analyst at Credit Suisse, said the leadership shuffle has created “known and highly regarded” management team at the jet-engine unit, which is also GE’s cash cow.

While the company’s aviation business is grappling with persistent supply chain and labor shortages, GE expects it to post at least 20% revenue growth this year on the back of a recovery in the global airline industry from the pandemic-induced slump.

GE’s shares were down 1.3% at $66.15 in afternoon trade.

QUEST FOR CLARITY

Nicholas Heymann, an analyst at William Blair, reckons the leadership changes are directed at clearing up any ambiguity surrounding the aviation unit’s management structure as it tries to attract “really good” independent directors to its board.

“They need to know who will be running the executive management team on each business before they sign up,” Heymann said.

The quest for clarity echoed Dave Calhoun’s recent decision to cement his long-term position as chief executive of Boeing (NYSE:BA).

Some industry sources said Irish-born Slattery’s position may also have been clouded by his lack of U.S. citizenship as he waits for a U.S. passport. GE is a major supplier to the Pentagon.

GE did not respond to a request for comment.

In his new role, Slattery, an industry high-flier who headed the civil unit of Brazil’s Embraer before a planned takeover of the regional planemaker by Boeing collapsed in 2020, will tackle the multi-dimensional chess game of jet engine strategy.

Engine makers and airplane manufacturers are involved in the early stages of a mating game that will define air travel for decades as planemakers ponder what type of propulsion will be needed for the next generation of medium-haul jets in the 2030s.

GE and its French partner Safran (EPA:SAF) plan to test-build an open-bladed jet engine called “RISE” that it says will be able to reduce fuel use and emissions by 20%.

Economy

Rough gas storage facility UK to be mothballed

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Rough gas storage facility UK

Rough gas storage facility UK, which was mothballed in 2017 due to safety concerns, will resume operations due to the country’s energy crisis. According to The Telegraph, Centrica, which owns the facility, is ready to begin filling it in early September.

The Occupational Safety and Health Administration has already approved the storage facility’s reopening. Now Centrica needs to coordinate state support and get the go-ahead from the North Sea Transition Authority. According to the authors, both of these tasks “do not appear to be problematic” for the company.

At the same time, the newspaper reports that Rough will initially operate at only a quarter of its capacity. A total of about 3.4 billion cubic meters of natural gas could be pumped there. According to the newspaper’s calculations, a partial return to service would increase the current total volume of blue fuel stored in Great Britain to 1.6 billion cubic meters.

“We can bring Rough back into service by increasing its capacity in stages each winter,” Centrica said.

Economists predict that in January 2023, electricity bills in the UK for local households could rise to more than three thousand pounds per year.

Earlier we reported that the U.S. economy was falling for the second quarter in a row.



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Economy

Will the decline in the US economy begin to slow? The economy is falling for the second quarter in a row. What does it mean?

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decline in the US economy begins to slow

Will the decline in the US economy begin to slow? Compared to the first quarter of 2022, U.S. GDP has fallen by 0.9% year on year, said the country’s Commerce Department. At the same time, the economy was supposed to show growth of 0.3 p. p. This was the second decrease in the year – in the first quarter of 2022; it decreased by 0.3 p p. compared to the previous quarter. The decline in real GDP reflects a decline in private investment in inventories and fixed capital, as well as reduced spending and investment by the federal government.

Decline in the US economy becoming stronger or weaker? 

Despite the decline in real GDP, the Commerce Department reported a 7.8% ($465.1 billion) year-over-year increase in GDP at current prices, as well as an increase in exports and personal consumption expenditures (PCE) related to Americans’ domestic and foreign travel.

Consumer spending, which accounts for two-thirds of U.S. GDP, increased 1% in Q2 after rising 1.8% a quarter earlier. Business fixed investment fell 3.9% and federal government spending declined 1.9%. Exports jumped 18% last quarter, while imports rose only 3.1%.

Economists at Deutsche Bank predicted recessions in the U.S. and Germany on July 15. In their opinion, markets were seriously changed after the data publication on July 13, which showed an acceleration of consumer price growth in the USA. The futures-markets dynamics allow for an almost 100% probability of a recession in the American economy till the end of 2022.

A report from the International Monetary Fund on July 12 stressed that the U.S. will find it “increasingly difficult” to avoid a recession. The Institute worsened its estimates of the economy: the growth forecast for 2022 was decreased from 2.9% to 2.3%; the real GDP growth expectation for 2023 was decreased from 1.7% to 1%.

The Fed is raising the rate at an accelerated pace: at the last meeting – immediately by 0.75 bp to 1.75%, which was the biggest increase since 1994. However, the current prime rate (1.58%) remains very low – far below both the neutral level (2.5%), and the inflation rate (9.1% in annual terms in June). Most analysts expect the Fed to have to raise the rate to at least 3.75-4% at the end of the year.

We should not expect that the very fact of a recession in the U.S. will have a strong negative impact on other developed world economies. The effect will strongly depend on the depth of the crisis. In any case, the severity of the recession will not be comparable to the Great Depression, when for four years there was a rapid drop in GDP.

Earlier we reported on whether Europe is in a recession.

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Economy

Is Europe in a recession now: the consequences are listed

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is there a recession in Europe

Is Europe in a recession now? The depth of the recession in the eurozone will depend on the pace as well as the extent of the economic decline, which can be tried to regulate by raising key interest rates. The consequences of a recession could be a drop in personal income and a rise in unemployment. 

The euro zone economy is very likely to face a recession, according to 60 percent of experts surveyed by Bloomberg. That number has risen from 45 percent in the last survey and 20 percent since the Russian invasion of Ukraine.

Is there a recession in Europe? 

Is there a recession in Europe? There are different variations on the speed at which the eurozone is going into this dynamic. Most markets will show zero or negative growth in the third quarter. Naturally, this will have an immediate impact on equity and commodity markets. This, in turn, will lead to big changes in the economy.

Different countries, regions and markets will go into recession unevenly. Most likely, the USA will show one more quarter of negative growth rates, which will be a clear indicator of a departure into this phase. The same is likely to be true for Europe.

There is no recession in China, but the growth rate is already declining. This is also a significant factor which will affect the global economy. The depth of the failure will depend on how the authorities of different countries will react to what is happening: whether they will slow down the increase in rates; whether they will manage to achieve a balance. This will have an impact on the price of raw materials, unemployment, etc.

No precise predictions are impossible to make at the moment: we will have to wait for statistics for the third quarter or at least for August.

Earlier we reported on an unexpected threat to the U.S. economy



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