GE <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 <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 <BA> and 25 <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."