Honda and General Electric form strategic alliance in the business jet engine market

Honda Motor Co., Ltd. and General Electric Co. (GE) today announced the formation of a strategic alliance to produce a new jet engine for light business jets.

The basic agreement was signed today at Honda Motor headquarters in Tokyo, Japan, by Takeo Fukui, President and CEO of Honda Motor, and David Calhoun, President and CEO of GE Transportation, a business unit of GE, which is headquartered in Fairfield, Connecticut, USA.

Today's agreement establishes the framework under which Honda and GE will further develop and certify Honda's new HF118 turbofan jet engine. Honda started its jet engine and aircraft projects in 1986, and has been developing the lightweight HF118 engine, in the 1,000 to 3,500-pound thrust class, since 1999.

The HF118 has run more than 1,400 hours, including ground tests and more than 200 hours in flight tests on an existing flying test aircraft. In addition, two HF118 engines have powered Honda's new experimental compact business jet, the HondaJet, in flight tests that began in December 2003.

The Honda/GE basic agreement includes: joint certification of the HF118, joint marketing activities under both companies' joint brand with airframe manufacturers, and continued discussions on the business structure under which the two companies will mass produce the engine. Honda and GE have been in discussions for more than a year, and expect to sign a formal definitive agreement later this year.

"We have great respect for the technology, design and performance built into Honda's HF118 engine," said GE's Calhoun. "There are tremendous benefits to Honda and GE entering the business jet engine market together. Honda is the world's leading producer of engines for motorcycles, automobiles and power products with superb technology. We are delighted to form a strategic alliance."

"This is a great step forward for Honda to enter the aviation business, which has been a dream of the company since its creation," said Honda's Fukui. "We aim to commercialize our compact jet engine business by merging mutual strengths: Honda's HF118 turbofan engine technology, and GE's technology, sales, and support through a spirit of equal partnership. We are confident in forming an alliance with GE, which is the leading manufacturer in the jet engine industry."

The emergence of smaller, relatively inexpensive business jets, which seat from four to eight passengers, creates the potential for considerable engine sales for future business and personal travel. Honda and GE envision an annual market in the future for approximately 200 or more of these business jets. Small business jet applications include owner operators and fractional owners, as well as potential "air taxi" operations. The "air taxi" business involves micro jets flying passengers on short stops using the vast number of small airports not serviced by major airliners.

Jet engine technology is also driving market change. In the 1990s, GE took its jet engine designs for large airliners to regional jet passenger aircraft, a market previously dominated by propeller-driven, turboprop aircraft. Now, Honda and GE will bring their expertise to a new generation of smaller, lightweight, low cost, and highly efficient turbofan jet engines with the lowest operating costs.

Honda (NYSE: HMC) is one of today's leading manufacturers of automobiles and power products and the largest manufacture of motorcycles in the world. Honda has always sought to provide genuine satisfaction to people worldwide. The result is more than 120 manufacturing facilities in 30 countries worldwide, producing a wide range of products, including motorcycles, ATVs, generators, marine engines, lawn and garden equipment and automobiles that bring the company into contact with over 17 million customers annually.

GE (NYSE: GE) is a diversified technology and services company dedicated to creating products that make life better, from aircraft engines and power generation to financial services, medical imaging, television programming and plastics. GE operates in more than 100 countries and employs more than 315,000 people worldwide.

The company traces its beginnings to Thomas A. Edison, who established Edison Electric Light Company in 1878. In 1892, a merger of Edison General Electric Company and Thomson-Houston Electric Company created General Electric Company. GE is the only company listed in the Dow Jones Industrial Index today that was also included in the original index in 1896.

Honda worldwide website: http://world.honda.com, media website: http://www.honda.co.jp/PR

GE website: http://www.ge.com and its aircraft engines business at http://www.geae.com.

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