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General Electric Pivoting to Airbus as Headwinds Hurt Boeing

General Electric is reportedly in talks with Airbus as the engine maker's other big customer, Boeing, continues to face headwinds over the grounded 737 MAX.

General Electric  (GE) - Get General Electric Company Report is reportedly in talks with Airbus as the jet engine maker's other big customer, Boeing  (BA) - Get Boeing Company Report, continues to face headwinds surrounding its grounded 737 MAX aircraft, which has all but halted orders for new planes.

GE is in talks with Airbus to design and sell an engine variant for Airbus' latest wide-body, called the A330neo, The Wall Street Journal reported on Wednesday. The discussions come in the wake of Boeing's decision to cut back production of that plane's rival 787 Dreamliner, the Journal reported, citing individuals familiar with the matter.

GE’s pivot to pitching Boeing-rival Airbus on new engines comes as supply lines within the global aviation industry continue to regroup and re-form, largely due to the prolonged  grounding of Boeing's 737 MAX, which has been on the tarmac for close to a year after two deadly crashes caused in part by glitches in its flight-control systems.

Late last year, Boeing temporarily halted production of the jet as it awaits the Federal Aviation Administration's  sign off for it to fly it again. The stoppage has hit suppliers, many of whom have laid off staff or issued profit warnings. The company recently said it plans to resume production ahead of re-certification in order to avoid outright shutdowns and layoffs. 

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GE told the Journal that while it doesn't comment on specific discussions with plane makers, "we continuously work to identify opportunities to add value for our customers and to assess introduction of new technologies into our existing engines."

Meantime, Boeing is facing additional scrutiny after reports of “foreign object debris” including tools and rags left in the fuel tanks of several newly built but undelivered 737 MAX aircraft raised additional concerns about quality-control processes - and the plane’s re-certification.

"Foreign-object debris “is absolutely unacceptable. One escape is one too many,” Mark Jenks, a Boeing vice president and general manager of the 737 program, said in a message to employees that was viewed by Bloomberg.

The company plans to inspect all undelivered aircraft, and has noted that the issue will not impact the grounded jet's return to service, which Boeing still expects to be mid-year.

Shares of GE were down 0.08% at $12.74 in morning trading on Wednesday, while shares of Boeing were down 029% at $337.89.