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UPDATE 4-Arconic taps veteran GE exec as CEO, Elliott pleased with choice

* Chip Blankenship's appointment effective Jan. 15

* Q3 profit misses Street estimates

* Shares down 10 pct (Adds Breakingviews column)

Oct 23 (Reuters) - U.S. specialty metals maker Arconic on Monday named a veteran of General Electric as its new chief executive, a move that pleased Arconic's biggest shareholder, which had been closely examining the hiring of a new leader at the company.

Arconic tapped Chip Blankenship as its CEO although Elliott Management, which holds a 12.1 percent stake, had another choice in mind.

"Chip Blankenship is an excellent selection... We have confidence that Chip will deliver the results and returns that Arconic is capable of producing," Dave Miller, senior portfolio manager at Elliott, said in a statement.

The decision was six months after the former CEO resigned under pressure from Elliott Management, which has been pushing for changes at Arconic. At the beginning of the year the activist hedge fund nominated directors to the board. It also has been trying to get Arconic to boost its stock price.

Shares of Arconic fell as much as 10 percent to $24.45 after reporting on Monday lower-than-expected profit for the third quarter, partly from higher costs from production of parts for the next versions of aircraft engines.

Arconic counts Airbus SE, Boeing Co, United Technologies Corp and GE Aviation as customers.

The company is ramping up production for parts that are increasingly being used on newer aircraft engines, as planemakers push for fuel efficient planes amid burgeoning demand from airlines.

Arconic kept its 2017 adjusted earnings per share outlook unchanged at $1.15-$1.20, while raising its full-year revenue forecast by 0.8 to 2.4 percent.

BLANKENSHIP'S AVIATION EXPERTISE

Blankenship, a 24-year GE veteran, will begin Jan. 15.

A metallurgist by training, the 51-year-old brings 20 years of aerospace experience to Arconic, having worked across GE's aviation businesses. He previously led GE Aviation's commercial engines operations.

Blankenship was named the CEO of GE Appliances in December 2011, and remained in the position until the unit was sold by GE to China's Haier Group for $5.4 billion in 2016.

Blankenship will replace David Hess, Arconic's interim CEO since April, and will become a member of the board.

Arconic's former CEO Klaus Kleinfeld resigned in April after the company found he sent a letter in "poor judgment" to Elliott, with whom it was embroiled in a proxy war.

Elliott's choice to lead Arconic had been Larry Lawson, who resigned as CEO of aircraft parts supplier Spirit AeroSystems Holdings Inc in 2016.

Arconic named John Plant, an Arconic director since 2016, as chairman, effective immediately. Plant will replace Pat Russo, who will remain on the board.

(Reporting by Ankit Ajmera in Bengaluru; Editing by Maju Samuel, Bernard Orr)