Melrose expands GE Aerospace partnership with $5bn deal

(Sharecast News) - FTSE 100-listed aerospace group Melrose has signed a new $5bn aftermarket services agreement with engines giant GE Aerospace. Melrose's GKN Aerospace division is widening its current risk and revenue sharing partnership (RRSP) surrounding GE Aerospace's high-thrust GEnx engine.

The new deal, estimated at $5bn over the full 30-year-plus life of the GEnx engine, will now cover new technology insertion, aftermarket repair of high-volume engines structures, and production of fan cases for a range of GE engines.

Melrose said GEnx has a strong future order book, and GKN Aerospace will now have "a greater share of life-of-program aftermarket revenues".

"This agreement illustrates the unique breadth and quality of our business across the aerospace engines industry and its position as a technology leader. We very much look forward to deepening our relationship with GE," said chief executive Simon Peckham.

Melrose clarified that there will be no material change to short-term financial guidance, but benefits will be realised in the medium term as new GKN technology enters the GE engine fleet.