Melrose Share Price Rose 4.84% on GKN-GE Aerospace Contract

The Melrose Industries PLC (LON: MRO) share price rose 4.84% after announcing that its GKN Aerospace Engines division has entered into a significant new partnership with GE Aerospace, a global leader in the aerospace engines market.

The two firms, GKN Aerospace and GE Aerospace, have substantially expanded their longstanding collaboration through a new agreement that extends RRSP (Risk and Revenue Sharing Partnership) involvement in the GEnx program. This high-thrust engine holds the distinction of being the fastest-selling in the industry.

The new agreement also encompasses technology innovation, the repair of high-volume engine structures in the aftermarket, and the production of fan cases for a variety of GE engines. 

GKN Aerospace's role in the GEnx RRSP has been expanded to go beyond its current focus on original equipment (OE) to encompass a significantly increased involvement in the aftermarket phase.

The GEnx engine has established its reliability and boasts a strong order backlog. In exchange for a more significant portion of the long-term program's aftermarket revenues, GKN Aerospace will make a more substantial contribution to GEnx aftermarket support.

Under the agreement, GKN Aerospace is set to advance the GEnx program by achieving its cost and carbon emissions reduction objectives, specifically by introducing its innovative proprietary technologies, including those related to additive manufacturing. 

Additionally, GKN Aerospace will be integrated into GE Aerospace's global repair network, offering specialised repair solutions for GEnx's complex structural parts. GKN Aerospace has also been awarded life-of-program contracts to supply all fan cases for the GEnx, CF6, and GE90 engines and half of the GE9X fan case assemblies.

The incremental sales for GKN Aerospace stemming from this agreement are projected to be about $5 billion across the GEnx engine's operational lifespan of over 30 years. Significant economic gains are anticipated in the medium term, spurred by GEnx aftermarket operations and integrating GKN's new technologies into GE's engine lineup. 

The agreement is not expected to affect short-term financial projections materially.

Simon Peckham, Melrose CEO, said: “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.”

Melrose share price. 

The Melrose share price rose 4.84% to trade at 513.70p, from Friday’s closing price of 490.00p.