GE Says Four Flagship Power Turbines are Shut Down in U.S.

General Electric Co said on Thursday that four of its new flagship power turbines in the United States have been shut down due to an "oxidation issue" and warned it expects the problem to affect 51 of the giant machines it has shipped, sending shares lower.

The problem was discovered a few weeks ago on turbine blades in a natural gas-fueled turbine, known as the 7HA, operated by Exelon Corp in Texas, GE told Reuters. "We expect the same issue will impact other HA units," GE spokesman Chris Shigas said in an email.

Shigas did not provide details about the oxidation or how it led to the shutdown. He said 10 other 7HA turbines in the United States were still operating.

The machines, which operate like jet aircraft engines and can power thousands of homes, represent GE's highest gas-fueled technical achievement and are crucial to GE's power division, which is struggling with declining sales and profits.

If the problem persists GE might need to pay compensation to customers and make costly design changes. It also could lose sales to competitors.

GE expects Exelon's turbine to return to service soon, and is working with customers "to address any impacted unit," Shigas said.

GE Power Chief Executive Officer Russell Stokes first noted the problem in a post on its Linkedin (LNKD) internet page on Wednesday, without identifying the plant or providing details.

"The minor adjustments that we need to make do not make the HA any less of a record setting turbine – they are meeting – and in many cases exceeding – their performance goals at every customer site today," Stokes wrote.

GE shares were down 3.7 percent at $12.38 on the New York Stock Exchange.

J.P. Morgan analyst Stephen Tusa said in a research note on Thursday that the turbine in Exelon's plant appeared to have suffered a broken blade, and cut his GE stock target to $10 from $11 a share.

Exelon was not immediately available for comment.

GE has received 82 orders for the HA turbine, which entered service in Bouchain, France, in 2016, and subsequently set a Guinness World Record for its high energy efficiency.

GE faces competition from rival turbines made by Mitsubishi Hitachi Power Systems and Siemens AG.

GE's HA turbines in Pakistan were crippled by problems earlier this year.

Reporting by Alwyn Scott in New York and Ankit Ajmera in Bengaluru