John Flannery took a step on Monday toward his goal of making General Electric a “simpler, leaner” company by spinning off its railroad business in a deal valued at roughly $11 billion.

It is the first move to shed an entire business since Mr. Flannery became chief executive last August, vowing to streamline the struggling industrial conglomerate and improve its financial performance.

G.E.’s railway business will be combined with the Wabtec Corporation, formerly known as the Westinghouse Air Brake Technologies Corporation. Wabtec, based in Wilmerding, Pa., makes equipment for mass-transit and freight railways.

Wabtec had revenue last year of $3.9 billion. The G.E. unit is a leading manufacturer of locomotives for freight trains, and it had sales of $4.2 billion in 2017. The combined company, Wabtec and G.E. executives said, will be stronger, have a broader mix of rail operations and become a Fortune 500 corporation.