GE &lt;GE> PROFIT OUTLOOK AIDED BY ENGINE ORDER

  One of General Electric Co's biggest
  businesses, aircraft engines, will ride a wave of increasing
  profits into 1991 because of a new contract worth 650 mln dlrs,
  Wall Street analysts said.
      Previously, it was expected the business would peak and
  decline at some point in the next five years. The improved
  outlook results from AMR Corp's &lt;AMR> decision to order 40 new
  planes powered by CF6-80C2 GE engines.
      "Creative financial footwork helped GE get the order," said
  Nicholas Heymann, analyst at Drexel Burnham Lambert Inc.
      AMR declined to go into detail on financing arrangements
  for its order of 15 Boeing Co &lt;BA> and 25 &lt;Airbus Industrie>
  twinjet long distance aircraft.
      But AMR said it was using "rent-a-plane leases" that allow
  it to operate the aircraft without adding to its debt
  structure. AMR also has the right to decline delivery of the
  planes or return them on short notice. The arrangement protects
  AMR in the case of an unexpected development such as a severe
  downturn in the economy.
      From GE's point of view the package looks like a good deal
  for several reasons, Heymann said.
      GE will be able to record revenue as a sale at the time of
  delivery, Heymann noted.
      And if for some reason AMR decides not to take the planes
  GE's financial arm, General Electric Financial Services Inc,
  would have little trouble rounding up another airline that
  wanted the fuel efficient planes. On the whole, the deal
  appears to pose little risk for GE, Heymann said.
      GE's stock declined 1/4 to 103-1/2 on 625,000 shares by
  midafternoon. H.P. Smith, analyst at Smith Barney, Harris Upham
  and Co said for a 40 billion dlr (revenue) company "no one
  order will have much of an effect on the stock."
      Russell Leavitt, analyst at Salomon Brothers Inc, said the
  order "will help to maintain a good level of production and
  profitability in the aircraft engine business" for GE.
      Heymann sees operating profits from GE's jet engine
  business rising from 870 mln dlrs last year to 1.3 billion dlrs
  by 1991.
      Revenue from jet engines was close to six billion dlrs last
  year, with well over half of the business in the military
  sector, according to analysts' estimates.
      The rosy outlook for GE's jet engine business coincides
  with an upbeat performance in other segments.
      Heymann expects GE to earn 1.39 dlrs per share in the first
  quarter of 1987. Saying many will be suprised by the results,
  he believes GE has shown through its acquisition of RCA Corp
  that it has a "unique ability" to buy a major business and
  reshape it, pruning some parts and recombining parts with other
  elements of its 14 business areas.
      Smith sees GE earning 1.35 dlrs per share in the current
  quarter. He credits good results at RCA, in turn aided by the
  NBC broadcasting operation, and lower interest rates.
      Leavitt sees 1.40 dlrs for the current quarter, in part
  crediting "significant benefits from the RCA acquisition."
  

