U.S approves GE’s request for a license to supply engines for China’s COMAC C919

U.S approves GE’s request for a license to supply engines for China’s COMAC C919

  • U.S Department of Commerce issues licence for GE to supply engines for China's COMAC C919.
  • COMAC C919 will be using GE's CFM LEAP-1C engine suitable to power narrow-body jetliners.
  • General Electric furloughed 50% of its aviation engine manufacturing workers last week.

The trade war of the United States with China had imposed multiple restrictions on the U.S companies in doing business with the firms in China. In an announcement on Tuesday, however, the government was reported to have removed one such restriction.

General Electric Co (NYSE:GE) received a license from the U.S government on Tuesday that allows the American multinational conglomerate to supply engines for COMAC C919 that is the latest addition to China’s passenger jets.

GE Will Supply CFM LEAP-1C Engine For COMAC C919

At the start of the year, Trump Administration was reported leaning towards rejecting GE’s request for a license to provide China’s latest narrow-body twinjet airliner by COMAC with its world-renowned CFM LEAP-1C engine. The COMAC C919 is likely to start commercial flights in 2021.

The CFM LEAP-1C is a joint venture between French Safran Aircraft Engines and American GE Aviation. The high-bypass turbofan is suitable to power the narrow-body jetliners.

In February, President Trump said that he has suggested the authorities to reconsider the decision regarding GE’s license.

GE’s license was issued by the U.S Department of Commerce. The White House and the Commerce Department refrained from commenting any further on the news at this stage.

As the Coronavirus continues to weigh on the global airline industry, General Electric had announced last week that it will place 50% of its aviation engine manufacturing workers on furlough for four weeks to cut costs and maintain the financial stature. As both of the world’s leading airplane manufacturers, Boeing, and Airbus use GE’s manufactured engines in at least 65% of their planes, GE’s decision is likely to reflect on both companies.

COMAC C919 To Compete Against Airbus A320 And Boeing 737

COMAC or Commercial Aircraft Corp of China Ltd. is expected to face major challenges in creating a place for its C919 in the market that is already almost completely dominated by the Airbus A320 or the Boeing 737. So far, the prominent airline outside of China that is committed to COMAC’s narrow-body airliner is Irish Ryanair.

At the time of writing, GE is trading at £5.93 per share in the stock market that marks a 6% decline since the market open on Tuesday and around 40% drop in 2020 so far. Its performance in 2019, on the contrary, was reported fairly upbeat with an annual gain of more than 35%.

GE currently has a market cap of £51.87 billion.

By Wajeeh Khan
Mr. Khan specialises in Public Health by academia but is a trader by passion. Taking up two new hobbies of writing and trading in his teen years, he is now a professional trader and news writer with over 5 years of experience in various financial markets. Khan is passionate about bringing insightful articles to his readers and hopes to add value to their portfolios.

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