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General Electric finds itself at the center of the Southwest Airlines fatality

Wednesday’s Southwest Airlines (LUV) incident is arguably the first mid-air miracle since the one on the Hudson. However, the first aviation fatality in the country in over nine years has shaken the industry, which had so far been enjoying a decent earnings performance in the face of rising fuel expenses.

The airliner’s shares fell slightly after CEO Gary Kelly confirmed the fatality and an investigation was launched in the incident. Preliminary investigation by National Transportation Safety Board (NTSB) found that the engine that exploded in mid-air was manufactured by CFM International, a JV between General Electric  (GE) and Paris-based Safran SA. It also found that the fatality was caused by shrapnel from the engine’s fan blade, which flew into the cabin and injured seven others as well.

GE shares closed 1.9% lower on Wednesday following the news.

Southwest airlines fight
Image Courtesy: Tomás Del Coro, Flickr

Meanwhile, CFM International has come in its defense saying the engine is one of the most reliable ones, and power over 6,700 airliners manufactured by Boeing (BA) and its European competitor Airbus. Anyways, Southwest Airlines have launched an investigation into the engine type, which is expected to be completed in a month’s time. Till then, GE will be on tenterhooks.

Aviation is probably the sole unit that is performing remarkably well for the troubled industrial mammoth.

Adding to GE’s woes, Reuters on Wednesday reported that a few Boeing customers including Korean Airlines had already launched an investigation into this particular engine. The report also adds that some European and American regulators already had apprehensions about this engine.

It may be noted that Aviation is probably the sole unit that is performing remarkably well for the troubled industrial mammoth. The GE stock has fallen almost 25% so far this year, and over 50% in the past one year.

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