The terrorist attacks of September 11, 2001, on the Twin Towers of the World Trade Center in New York City will forever remain one of America’s darkest days.
Two hijacked jetliners crashed into the Twin Towers, a third aircraft struck the Pentagon in Washington D.C., and a fourth crashed in rural Pennsylvania heading to Washington D.C. Commercial jetliners had never been used as assault weapons to wage such destruction. Nearly 3,000 people were killed.
A shaken airline industry would lose an estimated $5 billion over the next two years, including $1.5 billion alone during the four-day airline shutdown immediately following the attacks. Some airlines went bankrupt; many travel routes disappeared. After having endured a major airline recession in the early 1990s, the aviation industry faced yet another four-year period of difficult economic times.
However, amid the tragedy and its long aftermath, GE Aviation would show its true mettle in supporting a shaken commercial aviation industry. Looking back, it would prove to be one of the company’s most proud eras.
The impact on GE Aviation was immediate. Jeff Immelt, who had replaced the retiring Jack Welch as GE president and CEO only four days before 9/11, and Dave Calhoun, head of GE Aviation for only nine months, had to move quickly to protect the company’s aviation enterprise during a time of extraordinary uncertainty.
A business assessment was quickly made and difficult internal actions followed. Within days of the terrorist attacks, Calhoun and Chuck Chadwell, vice president of commercial engines, held an impromptu meeting on the lawn of Building 100 at GE Aviation’s Evendale, Ohio, headquarters to share with nervous employees the information they had gathered from customers. The news was not good.
Two weeks later, GE publicly forecasted 25 percent lower than expected airline engine deliveries in the coming year. With airlines flying unprofitably with passenger load factors below 50 percent, the GE division moved to reduce 4,000 jobs worldwide, approximately 13 percent of the total workforce.
The always-candid Calhoun didn’t mince words with reporters covering GE Aviation. “It’s a signal that nobody knows the answer,” he told the Cincinnati Enquirer.
However, GE investment in the airline industry never wavered. In the three years leading up the 9/11 events, the commercial aviation industry was rapidly expanding, and GE had launched the GE90-115B for the Boeing 777, the GP7200 engine (teamed with Pratt & Whitney) for the Airbus A380, as well as several variants of the GE CF34 engine for the booming regional jet market. With support from the parent company, GE Aviation retained research and development budgets in the aggressive $800 million to $900 million range in both 2001 and 2002. This assured that GE’s new development engine programs proceeded on time.
Bolstered by the R&D funding, GE also moved forward with its partner Safran Aircraft Engines in CFM International to develop technologies for upgrades of current CFM56 engines for the Boeing 737 and Airbus A320 aircraft that would help to lower operating costs for struggling airlines worldwide. In preparing for greater performance of future commercial jetliners, GE and Safran teams on both sides of the Atlantic Ocean continued aggressive R&D testing that ultimately led to the introduction of the best-selling LEAP engine in 2008. The technology pipeline simply could not dry up.
GE’s support of the airlines would extend directly into their operations. GE teams were deployed to airlines worldwide to initiate thousands of cost-saving quality and process programs. In addition, GE established payment deferral plans and advanced $5 billion in financing for cash-strapped carriers.
Immelt, whose father, Joseph Immelt, was a manager for decades at the GE Aviation plant in Evendale, stood behind the aviation enterprise in the challenging years ahead. “I had an inherent knowledge of the business that I saw through my father’s eyes when I was growing up near the [GE] plant,” Immelt recalled last year. “You win when your customers win. It takes that kind of attitude, and it’s embedded in the jet engine culture.”
Ultimately, GE Aviation was fortunate. The company weathered the post-9/11 uncertainty through increased military engine sales and by servicing the fleet of 14,000 GE and CFM56 engines in airline service. Despite the retirement of older GE-powered jetliners and reduced flight hours by carriers worldwide, more than half of Aircraft Engines’ 2001 revenues of $11.3 billion were derived from GE Engine Services. Ultimately, the installed base of engines in service, established over the previous decades, proved a godsend.
Calhoun also supported the military team’s forward-thinking initiative, led by Russ Sparks and Tom Brisken, to procure large inventories of military spare parts well ahead of customer requirements. The strategy bolstered GE income during the airline recession, while supporting critical military aircraft readiness to support U.S. military deployments to Iraq and Afghanistan.
The world feels the impact of 9/11 to this day, even though the airline industry has continued to experience strong growth for well over a decade. The leaders who steered GE Aviation through those difficult times at the outset of the new century continue to be proud of both the company and the industry’s resilience. “That [GE Aviation] leadership really hung together with our customers during some tough times,” said Chadwell.
“The 9/11 experience was one of those moments that showed the true strength of the company,” said Immelt.