Howmet CEO Addresses GE's $12B Deal as Supplier Shares Tumble

Howmet Aerospace's CEO on Wednesday addressed GE Aerospace's plan to acquire a key rival, a move that sent Howmet's stock tumbling amid investor concerns over increased competition. Speaking at a conference, CEO John Plant said he was "fine" with the deal, while acknowledging that soaring demand for jet engine components is currently "testing" his company's capacity.

Market Reacts to GE's Supply Chain Move

On Tuesday, GE Aerospace announced its intent to acquire castings manufacturer Consolidated Precision Products (CPP) for $12 billion in an effort to secure its supply chain and alleviate production bottlenecks. The news directly impacted Howmet, a major producer of similar components, whose shares closed down 10% following the announcement.

Speaking at the Jefferies Global Industrials Conference in New York, Plant downplayed the competitive threat. "I know the question is, if there is additional investment and capacitization of CPP in the future, is that (to) the detriment of everybody else...?" he said. "And I think we should be fine with that."

'Testing' Demand and Capital Expansion

Plant highlighted the immense pressure on suppliers as both commercial aircraft manufacturers and defense contractors ramp up production. This surge in demand for engine parts, he noted, is pushing Howmet's operational limits.

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"It is testing us in many ways because, you know, we hadn’t thought we were going to be there building this amount of equipment," Plant said. "The sheer scale of the capital expansion is certainly testing us." The company is also seeing growing demand for blades and vanes used in gas turbines for data centers, a market fueled by the expansion of artificial intelligence.

Future Revenue Outlook

Looking ahead, Plant reiterated a previous long-term forecast but indicated an update was forthcoming. He had previously stated that Howmet could see its revenues double from 2025 levels within a three- to five-year period.

He told the conference he would update that guidance within the next few earnings calls, providing a key data point for investors monitoring the company's growth trajectory amid the shifting competitive landscape.