GE Aerospace Q2 2025 Earnings Report

GE Aerospace EPS Results

• Actual EPS: $1.66
• Consensus EPS: $1.43
• Beat/Miss: Beat by +$0.23
• One Year Ago EPS: $1.20

GE Aerospace Revenue Results

• Actual Revenue: $10.15 billion
• Expected Revenue: $9.49 billion
• Beat/Miss: Beat by +$656.75 million
• YoY Revenue Growth: +21.20%

GE Aerospace Announcement Details

• Quarter: Q2 2025
• Date: 7/17/2025
• Time: Before Market Opens
• Conference Call Date: Thursday, July 17, 2025
• Conference Call Time: 7:30AM ET

GE Aerospace (NYSE:GE) (also known as General Electric) is a company that specializes in providing aerospace products and services. It operates through two reportable segments: Commercial Engines and Services and Defense and Propulsion Technologies. It offers jet and turboprop engines, as well as integrated systems for commercial, military, business, and general aviation aircraft. GE demerged into GE Vernova, GE Aerospace, and GE Healthcare.

GE Aerospace Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: 2025 guidance upgraded to mid-teens revenue growth and $8.2–8.5B operating profit, while 2028 outlook raised by $1.5B in profit and free cash flow.
• Positive Sentiment: Q2 results delivered 23% revenue growth to $10B and 23% profit growth to $2.3B, including 29% increase in CES services revenue and 45% rise in engine deliveries.
• Positive Sentiment: Backlog reached ~$175B with 70% of revenue from recurring services, supporting resilient multiyear growth driven by 49,000+ CES and 29,000+ DPT engines in service.
• Positive Sentiment: Secured strategic wins like Qatar Airways' order for 400+ GE9X family engines and a $5B U.S. Air Force F110 contract, reinforcing market leadership.
• Negative Sentiment: Outlook includes cautious assumptions on second-half departures and ~$500M potential tariff costs, offset by cost controls and pricing actions.

Presentation

[Operator]

Good day, ladies and gentlemen, and welcome to the GE Aerospace Investor Update and Second Quarter twenty twenty five Earnings Webcast. At this time, all participants are in a listen only mode. My name is Liz, and I will be your conference coordinator today. If you experience issues with the webcast slides refreshing or there appears to be delays in the slide advancement, please hit F5 on your keyboard to refresh. As a reminder, this conference is being recorded.

[Operator]

I would now like to turn the program over to your host for today's conference, Blair Schorr from the GE Aerospace investor relations team. Please proceed.

[Blaire Shoor, Head - IR at GE Aerospace]

Thanks, Liz. Welcome to GE Aerospace's twenty twenty five investor update and 2Q twenty five earnings call. I'm joined by Chairman and CEO, Larry Culp and CFO, Rahul Guy. Today, we will be sharing an update on our second quarter twenty twenty five results, financial guidance for 2025 and outlook for 2028, followed by a Q and A session. As usual, many of the statements we're making are forward looking and based on our view of the world and our businesses as we see them today.

[Blaire Shoor, Head - IR at GE Aerospace]

As described in our SEC filings and website, those elements may change as the world changes. Additionally, Larry and Rahul will speak to total company and corporate financials as well as our guidance and outlook on a non GAAP basis. With that, I'll hand it over to Larry.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Thanks, Blair, and we appreciate everyone joining us today. The GE Aerospace team is guided by our purpose, to invent the future of flight, lift people up, and bring them home safely. At any given moment, nearly 1,000,000 people are flying with GE Aerospace technology under wing. That is a significant responsibility that our 53,000 employees carry with great pride. We use Flight Deck, our proprietary lean operating model, to continuously improve safety, quality, delivery, and cost always in that order as we strive to provide unrivaled customer service and deliver our roughly $175,000,000,000 backlog.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Before we dive in further, I want to acknowledge the tragedy of Air India flight one seven one. We extend our heartfelt sympathies to the families and loved ones of those who lost their lives. Since June 12, our focus has been and remains on supporting our customers and providing technical support to the regulators. While we were looking forward to a broader update with you in Paris, Rahul and I are here today to share our second quarter results and our increased outlook. We'll create additional opportunities later this year to share more of the operational details we expected to cover with you in Paris.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Turning to the next slide. Safety is and always will be foundational to everything we do. Through decades of experience, learning, and continuous improvement, we've built our reactive, proactive, and now predictive safety processes. GE Aerospace was the first manufacturer to have its safety management system or SMS accepted by the FAA. We established our SMS a decade before the agency proposed requiring it.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

The system encourages our employees to report safety concerns voluntarily and ensures that they are thoroughly evaluated. SMS, together with our quality management system, are the foundation of our safety culture. While our approach to continuous improvement helps us drive safety up the value chain. Flight deck further standardizes our own processes to support safety investigations, leading to identifying corrective actions faster. We're also enhancing engine inspections to begin at the part level, extend through manufacturing, and continue into the aftermarket.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

And now we're deploying AI enabled tools to further improve inspection accuracy and consistency, helping to predict potential safety threats. Everyone at GE Aerospace owns safety, and we never compete on safety. Turning to slide five. GE Aerospace is an exceptional franchise. As a global aerospace leader in propulsion, services, and systems, we're well positioned to benefit from favorable long term market trends across both commercial and defense.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Our commercial engines and services business or CES is servicing and growing the industry's most extensive commercial installed base. We're proud to be underway on three out of every four commercial flights, demonstrating our unmatched scale and scope across the world's most successful and innovative aircraft platforms. Our defense and propulsion technologies business or DPT powers two thirds of all US military combat and helicopter fleets. DPT offers both the leading defense programs of today while developing mission critical technology for the future. Let's take a closer look at GE Aerospace today.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

As the industry's largest and growing engine fleet, our business model is highly resilient, largely due to our balanced exposure across narrow body, wide body, regional, and defense platforms. CES has more than 49,000 engines in service and growing. In 2024, we delivered a particularly strong year with $27,000,000,000 of revenue, growing 13%, with robust services demand and performance supporting higher profit. About half of our revenue comes from narrow body platforms, while wide body represents 35%. In DPT, we have more than 29,000 engines in service.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

2024 was a solid year with nearly $10,000,000,000 in revenue, up 6%, and profit up double digits. Our defense and systems business accounts for roughly two thirds of DPT revenue, including over 70% of revenue from US customers and around 30% internationally. Propulsion and additive technologies represents the remaining third with exposure to commercial programs and localized European defense capabilities. Notably, 70% of our total revenue comes from recurring, predictable, and highly profitable services, including three quarters of CES revenue and more than half of DPT revenue. This represents a significant growth opportunity as our commercial installed base continues to grow at a low single to mid single digit compounded growth rate through the end of the decade.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Services also enable us to live the customer experience and strengthen our relationships, seeing and hearing their needs firsthand while shaping our product road maps to ensure alignment with their future priorities. Turning to slide seven. Given macroeconomic dynamics, we're watching demand near term. This quarter, departures grew nearly 4%, in line with our expectations. For 2025, we're still planning for low single digit departures growth, taking a more conservative view on the second half.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Broadly speaking, we support promoting free and fair trade, including the duty free environment that has long fueled The US aerospace sector, leading to more than 1,800,000 US jobs and a $75,000,000,000 annual trade surplus. We commend the administration for The US UK trade deal, eliminating tariffs on the aerospace sector and view this deal as a strong framework for future trade agreements. Longer term, GE Aerospace is operating from a position of strength. Our robust orders over the last several quarters have increased our commercial services backlog to now over $140,000,000,000, supporting growth for years to come. Across the commercial sector specifically, we see strong fundamentals.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Air traffic growth is expected to outpace global GDP, especially in Asia Pac and The Middle East. And new aircraft builds and airline expansions remain healthy, supporting the growth of our installed base. On the defense side, we see solid momentum globally toward modernization and localization. Domestically, we're pleased the reconciliation package includes funding for key defense propulsion initiatives with more than $1,000,000,000 for sixth generation aircraft programs. Internationally, we're expecting faster growth than in The US, largely in response to rising global tensions and the evolving geopolitical landscape.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Overall, we expect the market to grow at a mid single digit compounded growth rate through 2028, reaffirming our strong trajectory. Moving to slide eight. Our vision is clear, to be the company that defines flight for today, tomorrow, and in the future. For today, we're ramping up services and equipment to support our customers' fleets while fulfilling strong demand for new engines. For tomorrow, we're expanding capacity and capabilities to deliver on while growing our backlog.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

This includes expanding our supply chain and service networks and investing in technologies to further enhance engine performance. And for the future, we're building the technological foundation that will define the future of flight across both commercial and defense. Flight deck is a systematic approach to running our company, translating strategy into outcomes while advancing our culture. Let me share here a few examples of FlightDeck in action to support our multiyear services and equipment ramp. Earlier this year, we launched a new technology and operations team to hardwire and accelerate the flight deck enhancements we made last year, often in partnership with our suppliers.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

The team is providing greater stability and transparency to our demand signals and stronger collaboration to help identify and then break constraints. This helps our suppliers deliver today while investing to support the ramp in the future. We're also removing waste within our own operations with a focus on improving output and turnaround times. Take our largest MRO site in Selma, Brazil, which is responsible for a quarter of our global volume. Here, the CFM 56 fan module has been the key constraint to reaching our turnaround time target.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Our cross functional team used value stream mapping and implemented flow lines to reduce lead time by over 30%. Now CFM 56 turnaround time at Selma is below eighty days. Additionally, our recently deployed AI enabled blade inspection tool is improving inspection accuracy and consistency while reducing inspection time by roughly 50%. Improvements like this are driving turnaround times closer to ninety days for GE NX and CFM 56 in our larger shops. That said, we have more work to do on our other platforms.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

And finally, we're expanding capacity with the LEAP installed base expected to roughly triple and GE NX to roughly double by 2030. We're growing our LEAP third party MRO network, which includes six premier partners. In this quarter, we saw significantly higher third party lead shop visits. Additionally, last year, we announced we'll invest more than $1,000,000,000 in our MRO and component repair facilities over the next five years. We've added Zeos in Poland in partnership with Glutanza Technique to our MRO network, which inducted its first leave engine earlier this year.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

And we're investing more than $1,000,000,000 across our US factories and supply chain infrastructure to support growth. Overall, we expect to grow internal and external capacity by approximately 40% by the end of the decade. The impact of Flight Deck and our technology and operations team combined is delivering better operational outcomes with substantial momentum. In the second quarter, material input at our priority supplier sites was up 10% sequentially. Stability also continued to improve with suppliers delivering more than 95% of committed volume, up nearly twofold versus early last year.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

This contributed significantly to second quarter output. CES services revenue was up nearly 30% year over year, supported by internal shop visit revenue up more than 20% and spare parts revenue up over 25%. Total engine deliveries were up 45% with commercial up 37, including LEAP up 38% and defense up 84%. And through the first half, we've delivered 12% growth in commercial units, including LEAP, up 10%, and 37% growth in defense deliveries. Overall, material input improvement has resulted in higher inventory as we accelerate output and grow LEAP deliveries 15 to 20% here in 2025.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

But I do wanna pause here and just thank our teams and our suppliers who are working hand in hand to deliver for our customers, both near term and longer term. We move to slide 11. We've won some sizable deals so far in 2025. I'd like to highlight a few. Qatar Airways announced a significant expansion of their fleet with a deal for over 400 GE NX and GE nine X engines, marking the largest wide body win in GE Aerospace history.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

IAG announced an agreement for 32 Boeing seven eighty seven aircraft powered by GE and X for British Airways. This further builds on upon our growing backlog for GE and X, and our life of program win rate now stands at 75%. And in defense, the US Air Force awarded a $5,000,000,000 contract for our f one ten engines to meet the evolving needs of allied operators. Today, we have more than 1,600 commercial and defense engines in backlog, and we're effectively sold out through the rest of this decade. Turning to slide 12.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

GE Aerospace is a business with tremendous competitive advantages built on decades of experience and significant investment. With the world's largest installed base of engines, we've accumulated over 2,300,000,000 flight hours, providing us with unmatched insights on performance, opportunities for improvement, and future breakthroughs. Add to that r and d investment of approximately $3,000,000,000 in 2025 or six to 8% of revenue per year, we're well positioned to enhance our foundational and current generation platforms while inventing the future of flight. Here's a specific example, composite fan blades, a technology that only GE Aerospace and our partners have in service today. Compared to traditional metal blades, these lighter and stronger fan blades were first introduced on the GE 90.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Now with over 140,000,000 flight hours on more than 2,500 engines in service, these blades are helping us deliver industry leading departure reliability. Our experience with the GE 90 along with GE NX and LEAP has informed that GE nine x development with fourth generation composite fan blades. These blades contribute to the platform's overall performance with enhanced durability and fuel burn. And finally, we're designing composite fan blades for the CFM RISE program, combining thirty years of experience with continued investment to help deliver the next step change in durability and efficiency. More on that in a moment, but let me first share with you how our current generations of engines is ramping with customer needs in mind.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Looking at slide 13, durability and reliability are the top priorities to ensure consistent performance for our customers. Leveraging our experience over multiple product generations, we're maturing technologies to deliver meaningful durability gains. Take the GE NX, for example. We launched the platform back in 2011 and released our durability package back in 2021. This resulted in a more than two and a half times increase in time on wing, supporting increased utilization.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Today, the fleet leader hot and harsh environments is approaching 4,000 cycles and still running. This means customers are keeping engines on wing about five years between shop visits and even longer in neutral environments. This has been a differentiator for us in the marketplace, underpinning our 90% plus win rate since 2023. Through our hot and harsh experience here, we've refined durability testing to replicate dust challenges, innovate effective fixes, and validate them. And we're the only engine manufacturer able to leverage this extensive wide body experience for narrow body ends engines, which has accelerated the LEAP learning curve, getting to mature time on wing faster.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

The LEAP one a durability kit released late last year that includes the upgraded HPT blade is now incorporated into all LEAP one a deliveries and shop visits. This will improve time on wing by more than twofold, matching our industry leading CFM 56 performance. Next up, we're working with Boeing to certify the LEAP one b durability kit in the first half of twenty twenty six. But we haven't stopped there. As we tested the upgraded HPT blade, our teams leveraging flight deck found further design improvements, which are already certified and set to enter production in the second half of twenty twenty five, further enhancing HPT blade producibility.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

These durability enhancements have supported a win rate of over 70% on the eight three twenty family since 2023. Turning to slide 14. We're also using our experience to enhance new engine platforms before they enter service. Starting with the GE nine x, the most tested engine in GE Aerospace history with more than 30,000 cycles, the equivalent of six years of commercial flying. Drawing on our GE NX in LEAP experience, this is the first time we've completed dust testing prior to launch, which has informed product enhancements such as the second iteration of the HPT blades.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Importantly, we're ensuring that the GE nine x is as close to maturity as it can be at launch. We're also progressing the CFM RISE program, our most ambitious and transformative technological effort underway. To date, we've completed over 350 program tests with an early focus on durability. This includes advancing new HBT blade cooling technology and testing full size fan blades along with more than 3,000 endurance cycles. And earlier this year at the Airbus summit, we outlined our vision for the future of propulsion with open fan technology.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Airbus and CFM teams continue to work together on engine and airframe integration as we look forward to engine ground level and flight test this decade. Big picture, we're continuously applying learnings and improving durability to advance new programs, ensuring we deliver the best performing engines for our customers. Spending another moment on CFM Rise, which will be a game changer for customers, prioritizing safety, durability, and efficiency. Looking at the open fan architecture. First on safety.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Leveraging our experience with composite fan blades, the open fan will spin slower at one sixth the speed of a traditional jet engine. This helps provide a safe flying experience even without a nacelle, we also expect will result in a quieter engine than today's leap. Turning to durability. Ryze's open fan architecture gains efficiency through the fan system rather than the core. This reduces the need to push the core to higher temperatures as much as a ducted engine, a key driver of today's engine removals.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

And finally, efficiency. Our customers need at least a 20% reduction in fuel burn to support investments in next generation technology. In our view, the open fan is the most promising path to accomplish this step change in efficiency. When it comes to delivering greater durability and fuel burn, we won't compromise on either as we recognize both are critical for our customers. With RISE, we believe we can accomplish the genius of the end, meeting customer needs for durability and delivering fuel efficiency.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Turning to slide 16. We're pursuing similar generational advancements in military propulsion. In The US, we completed testing on the XA 100 adaptive cycle engine, demonstrating significant gains in thrust and range. Building on that success, we're now progressing to the x a one zero two, aligned with the US Air Force's next generation adaptive propulsion or NGAP program. Importantly, earlier this month, congress funded $750,000,000 for the FA XX through the reconciliation bill in the coming years.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

And the US Navy recognized its need for a sixth generation fighter as the only platform capable of delivering the combination of range, stealth, advanced sensors, and standoff capabilities necessary to operate across mission sets in highly contested environments. We stand ready to deliver and encourage the Pentagon to move forward with this important program that Congress has already funded. Through Avio Aero, we represent Italy as an equal propulsion partner with The UK and Japan in the global combat air program, a next gen indigenous European fighter. We're actively investing to support a targeted 2035 entry into service. And at the same time with Kratos, we're advancing propulsion technologies for affordable unmanned aerial systems by the end of the decade.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

And to accelerate development of advanced hypersonic propulsion systems, we recently announced significant investments in our test infrastructure at select manufacturing sites, enabling us to conduct higher mach mission relevant testing. Inventing the future of flight has always motivated the GE Aerospace team. We're building upon our leadership positions across both defense and commercial. Shifting to the outlook on slide 17. Rahul will cover the second quarter results momentarily.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

But so far in '25, we're off to an excellent start, enabling us to raise both our near and longer term outlook. For 2028, we're raising our outlook for profit and free cash flow by $1,500,000,000 versus our prior view, driven by strong operating and commercial services performance. We expect to sustain strong adjusted revenue growth at a double digit compounded rate, which will be supported by robust demand for services and equipment. We expect to drive meaningful operating leverage over that period with adjusted EPS reaching at roughly $8.40. Operating profit is expected to reach approximately 11 and a half billion dollars with margins expanding to more than 21%.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

And we expect to generate substantial free cash flow of at least 8 and a half billion dollars with conversion around 100%. All in, this represents operating profit growth of more than $3,000,000,000 compared to our updated 25 guide driven by commercial services. We're well positioned for continued value creation for years to come. Let me pass it here over to Rahul.

[Rahul Ghai, SVP & CFO at GE Aerospace]

Larry, thank you, and good morning, everyone. Starting with our results, we had a strong second quarter, with improvement across all key metrics. Orders were up 27%. Revenue was over $10,000,000,000 up 23%, with CES growing 30% and DPT up 7%. Profit was $2,300,000,000 up over 400,000,000 or 23%, driven by services volume and price, which supported margins reaching 23%.

[Rahul Ghai, SVP & CFO at GE Aerospace]

EPS of $1.66 was up 38% from profit growth, a favorable tax rate, lower interest expense and a reduced share count. Free cash flow was $2,100,000,000 nearly doubling over last year. Looking closer at our businesses, CES delivered an excellent quarter with demand remaining robust. Orders for services were up 28% and equipment was up 26%. Continued demand, combined with material input improvement, drove meaningful revenue growth.

[Rahul Ghai, SVP & CFO at GE Aerospace]

Service revenue was up 29%, with spare parts revenue up more than 25% from higher volume and price. This included strong CFM56 shop visit growth and higher late third party shop visits. Internal shop visit revenue grew more than 20% from higher output, increased work scopes and price. This included LEAP internal shop visit volume growth of over 20%. Equipment revenue grew 35%, with spare engine ratio down sequentially and year over year as expected.

[Rahul Ghai, SVP & CFO at GE Aerospace]

Profit was $2,200,000,000 up 33%, primarily from services volume. CES margins expanded 50 basis points to 27.9%. Moving to DPT. Higher output supported a solid quarter. Orders were up 24% year over year, with defense book to bill of 1.2x.

[Rahul Ghai, SVP & CFO at GE Aerospace]

Revenue grew 7%, with Defense and Systems up 6% and Propulsion and Additive Technologies up 9%. Profit was roughly $360,000,000 up 5% on a tough compare. Volume, productivity and price more than offset self funded next gen investments and inflation. Margins declined 20 basis points to 14.1%. At the midyear mark, we've delivered high teens revenue growth, dollars 1,000,000,000 of operating profit growth and nearly $800,000,000 of higher free cash flow.

[Rahul Ghai, SVP & CFO at GE Aerospace]

Given the strength of our first half results and our expectations for remainder of the year, we are raising our 2025 guidance across the board. We now expect total revenue growth of mid teens, up from low double digits. With the absence of reciprocal tariffs in China thus far, we currently see reduced risk for spare engines and spare part deliveries. And material availability is improving, supporting higher spare parts growth. Therefore, we are increasing revenue growth expectations for commercial services to high teens and commercial equipment to high teens to 20%.

[Rahul Ghai, SVP & CFO at GE Aerospace]

This supports total CES revenue growth of high teens. Our DPT expectations are unchanged from mid- to high single digit revenue growth. For total operating profit, we now expect to be in a range of 8,200,000,000.0 to $8,500,000,000 up $350,000,000 at the midpoint versus our April guide from improved services outlook. And we now expect adjusted EPS of $5.6 to $5.8 growing over 20% at the midpoint year over year, reflecting higher operating profit and a reduced tax rate. Additionally, as we shared in April, heightened tariffs are resulting in additional costs for us and our supply chain.

[Rahul Ghai, SVP & CFO at GE Aerospace]

We are continuing to make progress on our operational plans to reduce the impact. Assuming that reciprocal tariffs are implemented after the current pause, we still expect the net impact of tariffs to be roughly $500,000,000 in 2025, which we are offsetting through cost controls and pricing actions. We now expect free cash flow to be in a range of 6,500,000,000 to $6,900,000,000 up from $6,300,000,000 to $6,800,000,000 driven by our improved profit outlook. With this raise, we expect to grow operating profit by over $1,000,000,000 for second year in a row, with free cash flow conversion remaining solidly above 100%. Now as we look at the longer term outlook on slide 20, win rates continue to be strong.

[Rahul Ghai, SVP & CFO at GE Aerospace]

Backlog is at record levels. We are making operational progress to improve durability and delivery, and defense spending remains resilient. With this backdrop, we are expecting that the improvement in 2025 guidance will carry through to our 2028 outlook. Starting with revenue. We now expect double digit growth on an annualized basis between 2428%.

[Rahul Ghai, SVP & CFO at GE Aerospace]

The main drivers will be growth in commercial installed base, largely from LEAP and GE and X an increase in work scopes as our fleets mature, supporting 25% growth in widebody revenue per shop visit favorable mix in defense with rising international defense shipments mid single digit growth or low single digit net price increases higher revenue will support double digit profit growth, with profit reaching approximately $11,500,000,000 in 2028. This growth, plus benefits from share buyback and a lower tax rate, will drive mid teens EPS growth. And we expect to convert 100% of net income to free cash flow, reaching roughly $8,500,000,000 of cash by 2028. Our updated outlook from profit and free cash flow both represent a raise of $1,500,000,000 versus our prior outlook. On slide 21, looking closer at our profit growth drivers between '25 and '28.

[Rahul Ghai, SVP & CFO at GE Aerospace]

Starting on the left at our new '25 profit midpoint of $8,350,000,000 The most significant driver of profit growth will be nearly $8,000,000,000 of Commercial Services revenue growth between 2528%. This will be partially offset by a mid teens increase in equipment revenue, including higher LEAP and GE9X shipments, and the normalization of spare engine ratio. We expect incremental GE9X losses of a few $100,000,000 in 2028 versus 2025, given higher volume. DPT revenue growth of mid single digits at improving margins will also contribute to profit growth. Given ongoing supply chain constraints, we expect material inflation to stay elevated, but pricing actions should more than offset that impact.

[Rahul Ghai, SVP & CFO at GE Aerospace]

And we are leveraging Flight Deck to drive two points of productivity annually, as we reduce waste by lowering the nonproductive and overtime in our shops and increase output per employee. At the same time, we are stepping up R and D investments to improve LEAP durability, support the GE9X ramp and advance technologies supporting the future of flight. Overall, these actions will add more than $3,000,000,000 of profit between '25 and '28. And despite the introduction of a new wide body platform and significant new product ramps, double digit annualized growth in services will support margin expansion. So let's unpack Commercial Services revenue in Slide '22.

[Rahul Ghai, SVP & CFO at GE Aerospace]

As you can see, both narrowbody and widebody are well positioned to deliver sustainable growth. Today, CFM engines power approximately 75% of industry's narrowbody flights. This share continues to increase, as our LEAP fleet is expected to grow roughly 3x by 02/1930. Narrowbody revenue is exceeding our prior expectations, driven by LEAP growth and the extended longevity of CFM56 fleet. As a result, we now expect narrowbody revenue to grow at a low double digit CAGR and 28 revenue to be approximately 15% higher than our expectations last March.

[Rahul Ghai, SVP & CFO at GE Aerospace]

Our widebody business remains a significant differentiator. We currently power more than half of industry's departures. We expect to maintain this position with GE9X I apologize, GE9X doubling its installed base by the end of the decade and continued utilization of GE90 fleet and the introduction of GE9X. We anticipate widebody services revenue will grow at high single digit CAGR through 02/1930, including GE NX at a low double digit CAGR. Taken together, the strength of our foundational suites, combined with our installed base growth, supports the annualized double digit services revenue growth.

[Rahul Ghai, SVP & CFO at GE Aerospace]

Moving to Slide 23. On Commercial Services revenue growth and how that will translate into significant profit improvement. Narrowbody profit is expected to rise over 70%, primarily from LEAP, with CFM56 continuing to contribute meaningfully. And by the end of the decade, we expect LEAP and CFM56 profit to reach parity, reflecting the maturity and the scale of the LEAP program. Widebody profit is expected to grow more than 40%, supported by installed base growth and higher work scope shop visits for both GE90 and GEnx.

[Rahul Ghai, SVP & CFO at GE Aerospace]

We also expect contributions from productivity, pricing and favorable mix as external shop visits increase. And even with LEAP shop visit volume growing at a 25% CAGR through 02/1930, we expect CES margins to stay at current levels as we are offsetting the impact of LEAP with better performance on other platforms. Altogether, we expect Services profit to grow over 50% between twenty four percent and twenty eight percent, with contributions from both foundational and current generation programs. Going deeper into the outlook for our foundational fleets on Slide 24. Currently, approximately 40% of CFM56 fleet has yet to undergo a first shop visit, and a majority of the operators anticipate keeping these engines in service well into 2030s.

[Rahul Ghai, SVP & CFO at GE Aerospace]

This sustained demand is resulting in fewer retirements. We expect retirements of around 1.5% in 2025, rising to 2% to 3% in 2026 before normalizing at 3% to 4% increased shop visit activity, which we expect to peak in 2027, with approximately 600 additional shop visits through 2028 compared to our outlook last March. And we expect a gradual decline in volume post 2027 to roughly 2,000 shop visits by the end of the decade. With this shop visit outlook, we expect CSM 56 revenue peaks in '28, underpinned by increased work scopes and pricing. We are seeing similar dynamics with GE90.

[Rahul Ghai, SVP & CFO at GE Aerospace]

Continued strong demand for freighter aircraft, coupled with a more gradual wide body production ramp, is extending the services demand across this fleet. We now expect internal shop visits for GE90 to grow to 28, representing approximately 100 incremental visits compared to our outlook last March. And as a reminder, wide body shop visits can be more than 2x the revenue of a narrow body shop visit, so this is a significant contributor to higher revenue. In addition, the scope for wide body shop visits typically increases by about 50% during the second shop visits. With approximately 70% of GE90 fleet yet to undergo a second shop visit, this dynamic is contributing to higher growth.

[Rahul Ghai, SVP & CFO at GE Aerospace]

Better performance from both CFM56 and GE90 is a key driver of our improved outlook compared to last March. Another significant contributor to our profit outlook is the growing LEAP aftermarket on Slide 25. Overall, the LEAP installed base will approximately triple by the end of the decade, with internal shop visits growing roughly at the same pace. Beyond revenue, we are focused on improving the profitability of services as the program matures. Touching on a couple of ways we are improving performance.

[Rahul Ghai, SVP & CFO at GE Aerospace]

First, we expect external shop visits to grow from 10% of the total in 2024 to fifteen percent in 2025 to 30% by the end of the decade. This increased volume drives spare parts sales and offers a mix benefit. Second, we expect to continue benefiting from catalog price increases. More importantly, we've significantly improved pricing in new service contracts as we move past launch. While these increases take time to materialize in the financials, higher shop visit pricing, combined with improved time on Wing, will support improved services profitability.

[Rahul Ghai, SVP & CFO at GE Aerospace]

We continue to expect approximately 70% of LEAP shop visits to be performed by CFM, split equally between our JV partner Safran and us. To further reduce shop visit cost, we are investing in repair technology, which typically costs roughly 50% less than new parts. This offers customer significant economic benefit while also reducing turnaround time as we do not have to wait for new material. Year to date, we have developed over 200 new repairs for LEAP and 1,000 repairs across the commercial engines business. Our goal is to more than double the number of LEAP specific repairs by 28.

[Rahul Ghai, SVP & CFO at GE Aerospace]

For context, we've developed nearly 3,000 repairs over the lifetime of the GE90 program, and we are targeting a similar number for LEAP at maturity. These actions give us confidence that we can navigate the impact from CFM56 retirement and that LEAP will not only equal CFM56 profit by the end of the decade, but the profitability levels will continue to improve beyond that. Now let's turn to how we plan to continue converting this profit growth into cash. We added approximately $3,000,000,000 of inventory between 2023 and 2024. And as a result, our inventory turns declined by about zero five point.

[Rahul Ghai, SVP & CFO at GE Aerospace]

The majority of this increase is due to trapped inventory. Material we purchased but can't yet use because we don't have all the parts needed to complete a shop visit or deliver an engine. As material availability and stability improve, we expect inventory turns to begin recovering. We see a clear opportunity to improve at least one full turn from '24 to '28. We'll get there by reducing work in progress and raw material inventory, driven by better flow and continued implementation of our pool based system with our suppliers.

[Rahul Ghai, SVP & CFO at GE Aerospace]

If you look to the right hand side of the page, you will see a growing installed base and increasing flight departures are fueling strong growth in billings. Take LEAP for example. Billings are expected to grow 2.5x between '24 and '28. For GE and X, we expect 1.5x increase over the same period. Given shop visit growth, the cash flow from contract assets will not contribute at the same levels as the last couple of years, but billings growth on these contracts continues to support cash flow growth.

[Rahul Ghai, SVP & CFO at GE Aerospace]

This gives us a clear road map to sustain cash conversion at or above 100% through 2028. To summarize, GE Aerospace is a business with solid operational and financial fundamentals. Revenue growth will be driven by positive secular trends, our growing installed base and our best in class products, technology and people. Profit growth will be driven by volume, productivity and price, offsetting the typical headwinds associated with new product introductions. Given this strong profit and cash performance, we have ample opportunity to compound shareholder returns.

[Rahul Ghai, SVP & CFO at GE Aerospace]

I'll now pass it back to Larry to cover capital allocation and share some closing remarks. Larry?

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Rahul, thank you. Pulling this all together on Slide 27, as Rahul just walked you through, our operating performance and robust commercial services outlook underpins our increased guidance of sustainable revenue, earnings, and cash flow growth. 2024 was a strong year with approximately a billion dollars more in operating profit than we had originally expected at the start of the year. In 2025, we're again performing ahead of our expectations and raising guidance across all key metrics. Compared to our 2024 Investor Day outlook, this represents an increase of more than a billion dollars in operating profit.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Importantly, we expect this momentum extends into 2028 with operating profit growing more than $3,000,000,000 and free cash flow growing over a billion and a half dollars versus '25. We're also leveraging our strong balance sheet and free cash flow generation to support mid teens EPS growth. With respect to capital allocation, our principles remain the same. First, we will invest in the business to support growth in current and future programs. Next, we have a bias toward returning cash to shareholders and expect we'll return more than 100% of free cash flow to shareholders through 2026.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Last year, we shared plans to return roughly 19,000,000,000 of cash to shareholders between '24 and '26 between dividends and buybacks. Now subject to board approval, we're increasing that to $24,000,000,000, including about $19,000,000,000 of buybacks and roughly $5,000,000,000 of dividends at roughly 30% of net income. This is 20% higher than what we discussed a year ago. Beyond 2026, we expect to return at least 70% of free cash flow annually through a combination of dividends and buybacks. Finally, we're open to opportunistic bolt on m and a with a high threshold for strategic, operational, and financial fit.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

We believe this balanced and disciplined approach best supports our goal of compounding long term shareholder returns. And to close, on slide 29, our strong operational and financial foundation supports our increased outlook, and our sustained competitive advantages will propel us to new heights. We have a diversified fleet of preferred platforms across the narrow body, wide body, and defense sectors. What we do and how we do it matter. Front and center are safety, quality, delivery, and cost always in that order.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Our services and technology offer industry leading operational reliability, including greater efficiency, extended time on wing, and faster turnaround times. We serve the industry's largest fleet of 78,000 engines with unrivaled customer service and flight support. This keeps us close to our customers through decade long life cycles, building meaningful relationships, and making us the partner of choice. Our talented engineering teams continue to develop breakthrough innovation to support our existing fleet and advance next generation technology. And finally, Flight Deck supports us in delivering results and lasting value for our customers and shareholders.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

So we're still far from reaching our full potential, yet we couldn't be more optimistic about our path ahead. We appreciate you joining us for this extended call on both the quarter and our revised outlook. So with that, I'll throw it back to Blair for questions.

[Blaire Shoor, Head - IR at GE Aerospace]

Before we open the line, I'd ask everyone in the queue to consider your fellow analysts and ask one question so that we can get to as many people as possible. Liz, can you please open the line?

[Operator]

Our first question comes from Scott Deuschle with Deutsche Bank.

[Scott Deuschle, Director - Aerospace & Defense Equity Research at Deutsche Bank]

Good morning.

[Rahul Ghai, SVP & CFO at GE Aerospace]

Good morning, Scott.

[Scott Deuschle, Director - Aerospace & Defense Equity Research at Deutsche Bank]

Rahul, the high end of the 2025 guide implies second half EBIT nearly $500,000,000 lower than the first half. But over the last few years, the second half EBIT has actually been trending around $400,000,000 higher than the first half. So your guide essentially has nearly $1,000,000,000 spread versus the seasonality you've demonstrated over the last few years. I understand there's this GE9X headwind this year, but it is a very stark difference versus typical earnings cadence. So just wondering if you can reconcile that second half EBIT decline for us. Yes.

[Rahul Ghai, SVP & CFO at GE Aerospace]

Scott, let me try and Larry please jump in here. So Scott, first, we're having a good year, right? Raised our revenue growth expectations from low double digit to mid teens. So about $900,000,000 of increase in revenue at the midpoint with about $350,000,000 of profit increase at the midpoint versus April. So we had a better second quarter than we expected.

[Rahul Ghai, SVP & CFO at GE Aerospace]

But if you look at the $350,000,000 split $350,000,000 profit increase, it is split between what our overperformance in the second quarter and raising our expectations for the second half of the year. So the first half, second half thing, we've been we expected a strong start to the year this year. And we've been striving to have a more linear year than we did in 2024 just given the OE ramp in second half of the year, including 9x shipments that we expected a couple of million dollars of headwind versus the prior year and also expected a lower spare engine ratio in the second half. And then the corporate expenses also typically step up in the second half of the year, and you can see that in the corporate expenses in the first half versus what we are projecting for the full year. And then there's an R and D step up between the first half and second half as well.

[Rahul Ghai, SVP & CFO at GE Aerospace]

And these expectations around all these factors have not changed from where we were back in April. But also, we are maintaining some conservatism that's around departures that Larry mentioned in his prepared remarks, which impacts our expectations for spare parts sales in the second half. And even with that, we're kind of expecting a mid teen services revenue growth in second half. But if you look at all of that, we should still see strong year over year profit growth in the second half at the midpoint of the guide. And overall, we feel better about the year than we did back in April.

[Rahul Ghai, SVP & CFO at GE Aerospace]

And if you step back, it should be another year of more than $1,000,000,000 of profit growth and, you know, billion 5,000,000,000.25 at the at the high end. So

[Scott Deuschle, Director - Aerospace & Defense Equity Research at Deutsche Bank]

Thank you.

[Operator]

The next question comes from Myles Walton with Wolfe Research.

[Myles Walton, Managing Director at Wolfe Research LLC]

Thanks. Good morning. Good presentation.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Good morning, Myles.

[Myles Walton, Managing Director at Wolfe Research LLC]

I wanted to touch on two assumptions, if I could.

[Myles Walton, Managing Director at Wolfe Research LLC]

One is the pricing assumption through twenty twenty eight twenty twenty four to 2028 and the low single digit assumption there, what would that imply for the go forward period '26 through '28? Would seem like it would imply no pricing. And then on the retirement step up to 3% to 4%, can you just give us some baseline as to, you know, for the last decade, the CFM 56 has been running about one and a half percent. Is there a prior period where you'd put this as similar where you'd have that quicker step up in retirement rates?

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Miles, maybe I'll speak to price, and, Rahul can take retirements. Yeah. I think if you just step back for a moment, I think you you know well our our pricing philosophy. We, we make significant investments in in next generation platforms. Obviously, provide a lot of value to our customers while taking on considerable risk.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

So we we really try to price more more broadly with, appropriate returns, around those, those commitments in in mind. I think the way we've looked at price here is really to to have price more than offset inflation in '25 between what we're doing in in CES services, you know, call it, up at a mid single digit level on a, on a net basis. That includes spare parts, right, where in some instances, we might, do a little bit better than that. It's really dependent on on on which program we're talking about. But I think as we look forward, we're probably looking at something on a mid single digit basis at a gross level, low single digit on a on a net basis, at least with respect to to to spare parts.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

But also keep in mind that as as we move past launch, I think Rahul touched on this in his prepared remarks, we anticipate to see better better pricing dynamics. And fundamentally, it's all about moving beyond launch. Right? LEAP is is well into the life cycle now. But it does take time to, to see that, fall through typically, call it eight years, thereabouts, post an agreement to really see that in the p and l.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

So a lot of volume here, work scope, expansion in a in a number of areas, a little bit of price. That's how you get to that that double digit top line number that we're looking at between, between now and '28. Yeah. Rahul, did you wanna talk to retirements?

[Rahul Ghai, SVP & CFO at GE Aerospace]

Yeah. I can talk retirement. So so, Miles, you're right. I mean, the the last couple of years have been really low. I mean, even this year, through the first six months of the year, retirements for CFM 56 have been running below where we were in '24.

[Rahul Ghai, SVP & CFO at GE Aerospace]

And if I remember correctly, '24 was below '23. So the retirements have been trending extremely low. But as you would expect that, hey, as the fleet ages, this should pick up. Right? And that's been our expectation.

[Rahul Ghai, SVP & CFO at GE Aerospace]

And now we've been, you know, proven wrong on that one before. But if you ultimately, what it comes down to is what do you expect in new aircraft deliveries and where you expect departure growth to be. So what's built into our assumptions is that both Airbus and Boeing kind of reach their stated goals over the next couple of years, you know, three to four years. And as those and if you, you know, add up what what Airbus aims to deliver and you add up what Boeing, know, aims to deliver, that leads to about a six to 7% increase in, you know, installed base growth, right, over where, you know, 19 to 20,000 narrow body aircraft that are flying today. And then you say, okay.

[Rahul Ghai, SVP & CFO at GE Aerospace]

The departures, we expect the departures to be up, call it, 3% or so, you know, low single digits, and you can say three to 4%. So that gets us to our ratio of three to 4%, somewhere in that zone. Now we don't have a precise insight into that number, but I think we we decided, Miles, so that everybody understands our fundamental assumptions going into what we are projecting for CFM56 shop visits because that's the fundamental driver of where the shop visits are going to be and and and the number that we'll see. So that's that's making sense.

[Myles Walton, Managing Director at Wolfe Research LLC]

Okay. Thank you.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Thank you, Miles.

[Operator]

The next question comes from Sheila Kahyaoglu with Jefferies.

[Sheila Kahyaoglu, Aerospace & Defense and Airlines Equity Research at Jefferies Financial Group]

Good morning, guys. Thank you. Maybe if we Good could talk about LEAP aftermarket profitability. It's been a major contributor to CES performance year to date. Can you talk about you talked about profits equal in the 2030 time frame, which based on the revenue buckets you give would mean margins pretty close to CFM56 levels.

[Sheila Kahyaoglu, Aerospace & Defense and Airlines Equity Research at Jefferies Financial Group]

So if you could talk a bit about the margin profile across CSAs and external for LEAP and how that progresses today to 28 to twenty thirty.

[Rahul Ghai, SVP & CFO at GE Aerospace]

Yeah. So, Shul, we have you know, overall, we are very pleased with how LEAP is progressing. Right? If you you know, we we're kind of hitting our key milestones here for for LEAP, both on financial performance and operational performance. And and the share has been higher than what we expected.

[Rahul Ghai, SVP & CFO at GE Aerospace]

So on financially, we've always targeted the program to to breakeven this year, and that's that's on track. We expected OE to breakeven next year. That's on track. And then, obviously, the installed base, as we, you know, said that in in our prepared remarks, we expect the installed base to be up three x. So if you look at fundamental, what are the drivers of LEAP service profitability, I would say there are a few.

[Rahul Ghai, SVP & CFO at GE Aerospace]

One, as the LEAP shop visits grow, we will leverage our fixed investments in the MRO shops at a greater rate. So the fixed cost will get utilized at a higher rate. Therefore, that should help improve the profitability. The second is around price. We spoke about kind of the mid single digit growth, low single digit pricing on CLP, plus the pricing discipline that we've been driving for pricing new shop visits.

[Rahul Ghai, SVP & CFO at GE Aerospace]

So that's the second piece in the lead puzzle. The third, I would say, is the growing aftermarket channel. Again, I said that earlier. So, you know, we expect about 30% off the shop visits to be external by the time we get to 2030. So that drives the spare parts revenue stream, which is now beginning to grow as we as we in 2025, but will continue to expand.

[Rahul Ghai, SVP & CFO at GE Aerospace]

And the last piece is going to be repairs. I mean, I think we we spoke about it in our prepared remarks as well. And you saw that, you know, when we were together in Selma, you know, some initial work that we're starting to do around that. So, you know, that's the that's the final piece. And I think you put all that together, we are seeing good progress on lead service profitability in '25, and I think that'll continue to improve as we get into the outer years.

[Rahul Ghai, SVP & CFO at GE Aerospace]

Profit equals CFM56 margins. I'll see if profit equals CFM56 dollars by 02/1930. And overall, I would say that LEAP service margins should start approaching our overall service margins by the time we get into that time frame.

[Sheila Kahyaoglu, Aerospace & Defense and Airlines Equity Research at Jefferies Financial Group]

Great. Thank you.

[Rahul Ghai, SVP & CFO at GE Aerospace]

Thank you.

[Operator]

The next question comes from Doug Harnett with Bernstein.

[Douglas Harned, Managing Director at Bernstein]

Good morning. Thank you.

[Rahul Ghai, SVP & CFO at GE Aerospace]

I Good morning, Doug.

[Douglas Harned, Managing Director at Bernstein]

I I I'd like to just continue on that topic because when you look out well, first, I wanted to make sure to clarify when you said leave service profitability should be comparable to overall service profitability or specifically to CFM 56. And then I guess the question I have is you're at the very early stages in terms of performance restoration shop visits, so a lot of the heavy work. How do you get comfortable in projecting what you know so far out five years out to really to really have the confidence you're gonna be able to get to those margins that are like CFM 56.

[Rahul Ghai, SVP & CFO at GE Aerospace]

Yeah. Well, so, Doug, just to clarify my comment here. This we when when she last about the service margins, and our comment was that lead service margins should equal overall service margins, not CFM 56. Right? So just to kind of clarify that.

[Rahul Ghai, SVP & CFO at GE Aerospace]

So, you know, they should be close to the overall service margin levels. So that's one. Second, if you look at kind of the, you know, looking at the trajectory, and I can start and Larry can jump in here. I mean, part of that is improvement in leap durability. If you see the improvement here that we've seen over the last couple of years, everything that we've been speaking to and driving to, we've we've been hitting those milestones.

[Rahul Ghai, SVP & CFO at GE Aerospace]

And, obviously, LEAP one a durability is now at CFM 56 levels for everything that we are shipping now and everything that we are overhauling in our MRO shops. So that's one. And and if you look at our trajectory on GE 90 or GE NX, you know, 60 to 70% of those fleets are under a long term service agreement, and the profitability on those programs is above our overall service profitability. So we have enough experience with these long term service agreements that, you know, we can do this. We can do it right.

[Rahul Ghai, SVP & CFO at GE Aerospace]

We're conservative in how we model it. And with improvement in durability, that's the, you know, that that's the that's the remaining piece piece in the of the puzzle, which we feel much better about today than we did a couple of years ago. Larry, anything you wanna add?

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

No. I mean, I think you hit it right. We, we try to model conservatively upfront, continue to push product performance, witness the durability kit with lead, and make sure that we are executing not only from a safety and quality perspective, but from a delivery cost perspective. So whether it be the fixed cost leverage you talked about, the variable cost improvements we ought to get from repairs, along with turnaround effect we see from repairs. There are a whole host of things that help the, help the bottom line. Put it all together, you get, our outlook here at least through '28.

[Douglas Harned, Managing Director at Bernstein]

Very good. Thank you.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Thank you, Doug.

[Operator]

The next question comes from Scott Meekus with Melius Research.

[Scott Mikus, Director - Aerospace, Defense & Space Research at Melius Research LLC]

Morning, Larry and Rahul. Nice quarter and good presentation.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Thanks, Scott. Good morning.

[Scott Mikus, Director - Aerospace, Defense & Space Research at Melius Research LLC]

I wanted to ask a question about the new HVT blades in the LEAP one a and LEAP b. That should result in better margins on both just your spare part sales, but also by extending the time on wing for the CSA contracts. So I'm just wondering how long are you expecting it to take to retrofit the roughly 9,000 plus leads that are already delivered. And then as those retrofits happen, should we expect you to be booking favorable contract margin reviews as those retrofits ramp up?

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Scott, maybe just a couple of key, key markers here. Again, we received certification for the durability kit for the LEAP one a late last year. I think Rahul mentioned in his prepared remarks, we're now fully in production both with Newmake and in the aftermarket. We're not going to go out necessarily and try to upgrade everybody overnight. That will be a multiyear process as the the field of engines come in for their next shop visit.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

So, you know, think think years, not months in that regard. But, clearly, as we talk about the LEAP install base growing by, what, a factor of three between now and 2030, all of those days will be covered. We updated the the outlook here for the the durability kit kit for the LEAP one b. Thinking about early next year. We'll go through a similar process in feathering that in both with respect to new make and in the aftermarket.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

And, again, with respect to the, the fleet that's out there, upgrade those as they, as they come in. So you you you put that together, I think we are, again, encouraged with the outlook here in part because of the improved durability performance. We know that's top of mind for customers. But in turn, we also are going to have a more producible, blade that is going to help us. It's already helping us on the LEAP one a, deliver better output.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

So part of the the services revenue number even in the quarter here, up 29%, is a function of, improved supply chain performance, to include, but not limited to, the, the new HPT Blade.

[Scott Mikus, Director - Aerospace, Defense & Space Research at Melius Research LLC]

Alright. Thank you.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Thank you.

[Operator]

The next question comes from Seth Seifman with JPMorgan.

[Seth Seifman, Executive Director at JP Morgan]

Hey. Thanks very much, and good morning.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Good morning, Seth.

[Rahul Ghai, SVP & CFO at GE Aerospace]

Good morning, Seth.

[Seth Seifman, Executive Director at JP Morgan]

I wanted to ask about the trajectory of margin going into next year given kind of the step down that's implied for the second half. When we think about we look out at 2028 and we see something that's above where we are this year and last year, but there's a starting point potentially in the second half of this year, that's considerably lower. So how do we think about how we bridge there, kind of from the second half of this year kind of through '26 and then and then getting to that destination in '28?

[Rahul Ghai, SVP & CFO at GE Aerospace]

Yeah. So as we think about '26, first, there's tons of momentum coming out of '25. You know, we spoke earlier about maybe improved our revenue expectations. We improved our profit expectations. So and, you know, part of that is just driven by our supply chain improvements.

[Rahul Ghai, SVP & CFO at GE Aerospace]

Part of that is driven by the macro environment being slightly better than what we thought back in April. So it's a combination of factors that's allowing us to improve our '25 outlook, and and those things should continue into into '26 as well. So now as you think about '26 specifically, you know, and you take different take pieces of our business. On Commercial Equipment, sufficient backlog extends multiple years. As Larry said in his prepared remarks, we kind of sold out through the end of the decade.

[Rahul Ghai, SVP & CFO at GE Aerospace]

So we're not expecting a big disruption. We expect to kind of stay the course here with improving our engine output and improving shipments. On the commercial services side, there is some uncertainty in the environment, but it feels a lot better than it did three months ago, Right? And more importantly, as you think about our business, our basic growth algorithm of the business has not changed, right, on the on the services side, even in an uncertain economic environment. You know, you talk about, LEAP installed base growth.

[Rahul Ghai, SVP & CFO at GE Aerospace]

You talk about LEAP share of cycles being up almost six points versus where we were in 2023. The number of engines coming off wing, that is gonna be up in '25. That's gonna be up in '26. And that is irrespective of number of cycles they're gonna fly now. That's just the number of cycles they've previously flown.

[Rahul Ghai, SVP & CFO at GE Aerospace]

So that is good as well. And then we're increasing the wide body work scopes, combine that with a mid single digit price increase. So all that gives us reasonable confidence about our Service business as we think about '26 and the achieving the growth targets that we've outlined. And on VPT, not it should be steady. Business got $20,000,000,000 backlog today, so that should be good as well.

[Rahul Ghai, SVP & CFO at GE Aerospace]

So while the economy may play a role here, I think overall, we feel good. And then regards to your question around second half to '26, I I just would not index too much on a quarter or a half. Right? Because there are factors that can impact performance. Like, you look at the second half, I think we spoke earlier about corporate expenses being more skewed towards the second half, r and d being either stepping up here between first half and second half.

[Rahul Ghai, SVP & CFO at GE Aerospace]

Same thing you take with the 9x shipments. They're all sitting in the second half versus being split throughout the year. So I would you know, as you think about run rating into 26, I think the full year is a better baseline just to normalize those things and then you project forward.

[Seth Seifman, Executive Director at JP Morgan]

Great. Thanks very much.

[Operator]

The next question comes from Gavin Parsons with UBS.

[Gavin Parsons, Director, Aerospace & Defense Equity Research at UBS Group]

Thanks, guys. Good morning.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Good morning.

[Rahul Ghai, SVP & CFO at GE Aerospace]

Good morning.

[Gavin Parsons, Director, Aerospace & Defense Equity Research at UBS Group]

You have obviously strong CES order growth in the quarter, but you still do have that conservatism in the second half of the year that you talked about. Is that informed by behavior changes from airlines or your conversations with customers, or it's staring on the side of caution? And then similar question, you know, as MAX and and LEAP deliveries ramp up, are you hearing any fleet planning changes in terms of retirements from your customers? Thanks.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Yeah. But I I would to the first question, I don't think we've got a a tremendously different perspective on the second half here today than we did ninety days ago. Right? We've got a second quarter where departures were in line, with the first up 4%, and we watch that on a daily basis. We've said for the full year, we think we'll end up being up low single digits, which would suggest a a flattish, slightly up back half.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

But I don't think our commentary in that regard is too too far out of line with, what you're hearing from the airline. Some have suggested maybe that's a a touch conservative. We we've been called worse. We'll, we'll we'll take that. I think with respect to Skylines, I don't think we've seen any change in customer behavior.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Right? Whether it be what we're doing with, with Boeing on the MAX, on the wide body platforms, with Airbus, on the NEO, those those backlogs are real. Those annual step ups in production are where we're, focused at, at at every turn, but we haven't really seen that, evolve or or or or change. So it it many respects, it's all you put that together, it's what undergirds the outlook the the improvement in the outlook for 2028. Right?

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

The foundational platforms are gonna be used for longer, be it the narrow body or the wide body space, and we know we have, a lot of not only demand to service, but momentum in doing so as we think about how Flight Deck is helping us improve deliveries. I mean, anytime you print a, a new MEG engine, increase of 45% year over year, you know you've got momentum. Again, shout out to the supply base. They're rather working hard, working well, working with us. But in terms of customer behavioral changes, we really haven't seen, much new or different in that regard over the last ninety days.

[Gavin Parsons, Director, Aerospace & Defense Equity Research at UBS Group]

Appreciate it.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Thank you.

[Operator]

The next question comes from Ron Epstein with Bank of America.

[Ronald Epstein, MD - Aerospace & Defense at Bank of America Merrill Lynch]

Hey. Yeah. Good good morning, guys.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Good morning, Ron.

[Ronald Epstein, MD - Aerospace & Defense at Bank of America Merrill Lynch]

It seems like since the Paris Air Show, the discussion around RISE has changed. It really does seem like you all feel much more confident in the technology than in the program. And in fact, you know, your competitors, you know, trying to say, no. No. No.

[Ronald Epstein, MD - Aerospace & Defense at Bank of America Merrill Lynch]

That won't work. And it really just seemed like there's, you know, flags getting put in the ground. So, I guess, broadly, what what makes you all feel so good about Rise today? And if it doesn't end up being an unducted fan, is there a ducted option?

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Rod, we were really looking forward to putting the full team on stage in Paris. I think everybody understands why we adjusted that original plan and are here in an abbreviated form. I'm glad you you think we planted the flag. It was a a flag we planted several years ago at, at the air show, but we were gonna be as full throated in Paris as hopefully we are today with respect to our confidence and our optimism about the RISE development program, technology development program, just as a reminder for everybody, and in particular, the open fan architecture. Why?

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

To your first question, do we feel so good about it? I think it's really a combination of all the progress that we're making in the labs. Again, I'll underscore technology development. But we now have over 350 program tests at the module subsystem level, right, that is not only focused on that propulsive efficiency gain we we talk so much about, but also durability. And to be able to, again, leverage everything that we've done, not only in in predecessor wide body platforms, but narrow body here as well, I think just sets us up to, to have confidence to go with, go with this architecture.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

More to come. Right? This is a multiyear effort, ground test, flight test, all of that. But then I think when you combine that with what we're hearing from so many in the industry, right, who understand the, the pivot to relying more on propulsive than thermal efficiency. We had Mohammed Ali who runs technology and operations up on stage, in Toulouse just a couple of months ago, right, talking about the joint work we're doing with with Airbus in in that instance and their own, their own thoughts around what that next generation narrow body is gonna require in the latter part of the, the next decade.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

So we're all in, Ron, on OpenFan. Not to be strident about it, but really to just make sure that we're making the investments today and all the underlying technology components that are gonna deliver on that next generation narrow body propulsion, platform that the industry will need.

[Ronald Epstein, MD - Aerospace & Defense at Bank of America Merrill Lynch]

Got it. Thank you.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Thank you.

[Operator]

The next question comes from David Strauss with Barclays.

[David Strauss, Managing Director - Aerospace & Defense Equity Research at Barclays]

Thanks. Good morning.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Good morning, David.

[Rahul Ghai, SVP & CFO at GE Aerospace]

Good morning, David.

[David Strauss, Managing Director - Aerospace & Defense Equity Research at Barclays]

Wanted to ask a couple of questions on OE side of things. I guess, first of starting with 9x, the production rate assumptions that are underlying your loss forecast on the 9X, if you can give us some detail there, what you're assuming for LEAP deliveries out in 2028? And then how much you think you know, better lead profitability on the OE side and Gen X profitability can offset some of that that incremental nine x headwind? Thanks.

[Rahul Ghai, SVP & CFO at GE Aerospace]

Okay. I'm taking notes here, David, as I'm trying to answer the question.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

There there there there are few there. But I think he start I think he started on the, on the nine x and and thus the triple seven x.

[Rahul Ghai, SVP & CFO at GE Aerospace]

Yeah.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Yeah. Maybe is is context.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Right? We're, we're excited to be underway. We have started shipping engines to Boeing and are working with with them, as you would imagine, on on EIS. I think we're encouraged by what we hear from customers. Right?

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Witness the the 60% win rate versus competition. We got over a thousand engines now in backlog. So the market really wants to see this this platform, this engine come forward. We know that at EIS, it'll be the most tested engine really in the company's history. We've got over 30,000 cycles, behind us now, 8,000 endurance cycles.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

So, I mean, that's that's a significant, test regimen. And, again, leveraging what we've learned particularly in hot and harsh environments, we've got, over, 1,600 dust ingestion tests that are behind us. So we continue to learn and iterate there. I think we're on our second generation, both the HPT blades and the the CMC nozzles. So a lot happening in this regard.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Well, maybe you can hit some of the modeling assumptions, but we're, we're excited to be under wing, and I think this is gonna be a a winning platform in the marketplace.

[Rahul Ghai, SVP & CFO at GE Aerospace]

Yeah. Absolutely. So on on the on the losses, I think Larry touched on some of the, you know, the the the trends that are underpinning this, David. We shipped our first engines to Boeing last year, and we're increasing our shipments to Boeing this year in 2025, all in the second half of the year. And these are initial shipments with kind of the highest losses, so we do expect a couple of $100,000,000 of profit headwind in '25.

[Rahul Ghai, SVP & CFO at GE Aerospace]

And that is no change to to prior expectations. Now we're working to get get the cost down. We expect to take about 30% of the cost out by the time we hit the fiftieth unit, another 30% out by the time we get to the two fiftieth engine. So we'll move start moving past kind of, you know, peak losses, which we expect a year after entry into service for the for the for the platform, right, which we are still expecting that to be in 2026. So and then as you think about the '28 guidance that we've provided, the, you know, the the losses per engine start to come down.

[Rahul Ghai, SVP & CFO at GE Aerospace]

But still, as since the volume is still growing, we do expect the losses to be a few $100,000,000 higher in '28 versus where we are in in '25. So you're seeing kind of then we move past that, and we expect the program to get profitable as we get into the 2030s. So that's our expectation of the of the LEAP trajectory. I think, Larry, the and those are the question on on leap volume. Do wanna take that?

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Yeah. I think I think David was asking about '28, if if I heard him correctly. Just maybe to back up for a moment. I think we're, again, encouraged by the momentum we've got only here in the quarter, but in the half. Right?

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

I mean, quarter was up new make 38 percent for the first half year over year up 10. And I think that as we generate more momentum with Flight Deck, as it probably gets past the, the labor disruption they had in the second quarter, and we're still confident around our deliveries for this year. We've said previously we'd be up 15 to 20%. No, no change in that outlook here in '25. That puts us, I think, on a path to deliver what 2,500 leads in in 2028.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Plenty of work to do, not only with with Supran, but but all of our suppliers, but that's, that's what we're here for. And, again, I think we can look at the second quarter and the first half and point to a number of signs of improving performance.

[David Strauss, Managing Director - Aerospace & Defense Equity Research at Barclays]

Great. Thanks for hitting them all.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Glad we caught them all.

[Operator]

The next question comes from Gautam Khanna with TD Cowen.

[Gautam Khanna, Managing Director at TD Cowen]

Thanks. Good morning and nice presentation, guys.

[Rahul Ghai, SVP & CFO at GE Aerospace]

Good morning, Gautam.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Thank you. Good morning.

[Gautam Khanna, Managing Director at TD Cowen]

I was wondering if you could elaborate on the state of the supply chain. You guys have given us good updates in the past, how that's progressing, where the pinch points still are. And also, you could just comment on your expectations of gross inflation over the, supply chain inflation over the, forecast period. Thanks.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Sure. Well, you know, again, I think with the the proof points that we've shared this morning, not only in terms of output, but but also input, I think we're really encouraged by what we're able to do with Flight Deck and as a function of this new organizational construct that we put in place earlier this year, let alone what we're seeing from an input perspective from, from suppliers. But I can remember vividly a year ago when we weren't necessarily getting what we needed in terms of volume, but the variability around delivery to expectations, to commitments rather, was all over the place. And that's just it's just it's hard enough to ramp, but when you don't have that that visibility, that certainty, it's even harder. And that's why we call out not only the 10% sequential improvement first quarter to second quarter, just in sheer volume that we're getting from our our critical suppliers.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

And, again, when we say our our our priority or critical supply, we're really talking about 12 companies across 18 sites. But for them to be delivering to their commitments in the 95% range just makes life a whole lot easier. But frankly, what I'm most excited about, you don't see in these numbers. We see it day in, day out, but just the way our supply chain, our engineering, our quality teams have come together to be quicker, to be deeper in our technical problem solving and to have, you know, frankly, a higher level of expectation with respect to countermeasures, both short and, long term, all the while taking that to the supply base, who I think by and large would hopefully tell you with with outside of our earshot that they're working with a different GE Aerospace, that we're more constructive or more collaborative. We we we wanna be their best customers.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Right? Because there's we know there's no way we serve the airlines and the airframers who depend on us without having the best possible supply base in the world. So, again, a lot of proof points here. What I see qualitatively supports that all the more, but we need to do more in the second half than we did in the first half. We need to do more next year than we did this year.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

We'll be talking about this for a while. I don't want anyone to think, okay. Well, check the supply chain box. That's done. Anything but again, lots of proof points that suggest we're, we're all moving in the right direction.

[Rahul Ghai, SVP & CFO at GE Aerospace]

Yeah.

[Rahul Ghai, SVP & CFO at GE Aerospace]

And then to hit your other point on inflation, Gautam, I think it goes hand in hand with what Larry said about, you know, the continued ramp that we need to see from our suppliers. So the material delivery environment is expected to remain tight. You know, we're not expecting that this magically gets better, and you see the ramp that that we need to deliver on both on the OE side and on the aftermarket side. I mean, you think about where Boeing and Airbus, you know, the benchmark that they are putting on in the in the market. And so expectations, like, we'll be up 60% from where we are in terms of total aircraft output by in the next three years or so.

[Rahul Ghai, SVP & CFO at GE Aerospace]

And then you combine that with the aftermarket growth that we need to deliver on and the defense market. So we expect the supply chain environment to remain tight, and that drives a higher inflationary environment than we've seen in the past. So we are really not expecting any let off in the inflation that we have been seeing here over the last couple of years. So we're expecting a consistent environment from from where we are. And then, you know, our as you said, as we were walking through the profit drivers for '28, we are expecting that overall, given what we've outlined in pricing this morning, that the pricing will cover inflation.

[Rahul Ghai, SVP & CFO at GE Aerospace]

So that's that's the building blocks for the '28 profit.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

And I think as we improve those deliveries, Rahul, not only in terms of volumes, but just the the improved linearity. Right? I think about the labor productivity we saw in the second half or excuse me, the second quarter. I think about a number of our key facilities like Lynn that have gotten off to a very good start here in July. Right?

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Just with those inputs coming in at a higher level, coming in more predictably in a more linear fashion, we're just able to mitigate some of that material price inflation so much more effectively Absolutely. Than we saw in '24 or '23. Yeah.

[Gautam Khanna, Managing Director at TD Cowen]

Thank you, guys.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Thank you.

[Operator]

The next question comes from Jason Gursky with Citi.

[Jason Gursky, Equity Research Analyst at Citigroup]

Hey, good morning, everybody.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Good morning.

[Jason Gursky, Equity Research Analyst at Citigroup]

Hey, Larry. I'm going to just go back to some of the comments that you made about the international defense outlook, and I think you used the word localization, maybe in your words. So just kinda curious how you think the company is gonna participate in the growth of European defense budgets that we're likely to see over the next decade. Do you you need to find additional partners or to take advantage of this growth? Do you need to make some investments either organically or inorganically in the region to assure that, you know, you are local enough in the views of the Europeans to to take on some of this new work? Thanks.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Well, I think that with respect to Europe in particular, but but but even more broadly, the, the optimism we have around, defense growth is going to be fundamentally within defense and systems. And it will really be around these existing programs that we've got really across the board, both in rotorcraft and in in combat jets, trainers as well. So those increased budgets, I think, play into our existing footprint very well. It's a little bit of what you see with the f one ten agreement as well. And, frankly, those international contracts tend to be priced a bit better.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

They're they're more, they're structured more like commercial agreements than, than not. So we get not only the revenue, but the, the margin hit. Part of what we don't get to show you, I think, today doing this virtually as opposed to having the team on stage in, in Paris is, you know, putting the spotlight on Avio Aero, which is our native European defense position in, in Italy. Very strong position with the MOD there, with exposure to Eurofighter, Eurodrone, GECAP, all of the, the core programs there. And they'll they'll be a a focal point for us here as we go forward.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Are we open to other partnerships, other arrangements? Of course. But, frankly, we we we like where we are positioned today, both from a US base as well as from Avio. And know that, again, given the backlogs, I think both Rahul and I have pointed to, we're gonna have a good growth trajectory on top of, or before we get any additional, major orders from from any of those customers, be it again in Europe or more broadly.

[Jason Gursky, Equity Research Analyst at Citigroup]

Great. Thank you.

[Operator]

The next question comes from Ken Herbert with RBC Capital Markets.

[Ken Herbert, Managing Director at RBC Capital Markets]

Yeah. Hi. Good morning, Larry and Raul.

[Rahul Ghai, SVP & CFO at GE Aerospace]

Good morning, Ken.

[Ken Herbert, Managing Director at RBC Capital Markets]

Yeah. I wanted to ask about the the 15% higher revenues associated with narrow body services through 2028. Just curious if you could parse that out a bit, and specifically from from a couple of angles. One sort of sounds like much of that is CFM 56, and I'm wondering if if you've seen within that any fundamental change in in airline spending, like greater percentage of engines, you know, seeing a second or third shop visit, or how much of this is really just supply chain unlock and and better turnaround times and your ability to to obviously get better flow through?

[Rahul Ghai, SVP & CFO at GE Aerospace]

Yeah. It's a great question, Ken. So let you know, if you I think what you're touching on, let me if I just step back for a second before I get into the narrow body. You look you know, what we did this morning is, we improved our services outlook from where we were back in March by, call it, $4,000,000,000. And that's a combination of two things.

[Rahul Ghai, SVP & CFO at GE Aerospace]

One, we improved our expectations of growth in the future. We went from high single digit growth expectation to a double digit growth expectation. And that's coming off a higher starting point in 2024. So you put both of them together, you know, the services revenue are up, you know, approximately $4,000,000,000 from from where we were back in March. And that is a fairly broad based improvement in outlook, Ken.

[Rahul Ghai, SVP & CFO at GE Aerospace]

It's coming both from narrow body and from wide body. So if you could get getting into the narrow body where you were a second ago, I think that there are kind of two things that are driving the narrow body improvement. One, as we said earlier, we're seeing 600 incremental shop visits for CFM fifty six between now and twenty eighth and where we were back last year. So that that is fuel retirement, you know, and also just the the airlines keeping their fleets longer. I mean, as you see, even some of the let's just talk about it.

[Rahul Ghai, SVP & CFO at GE Aerospace]

They talk about the fact that they are renewing leases at kind of close to 95% from where, they were just 30 to 40% a few years ago. So these fleets are just continuing to fly longer, and that's what that's what we're seeing. Also seeing an increase in LEAP installed base. Right? So the LEAP installed base is is growing, and that is driving an improvement in in Outlook.

[Rahul Ghai, SVP & CFO at GE Aerospace]

So so the NanoBody is a combination of both CFM 56 and Leap, and the same thing's happening on the white body side as well. I mean, body, you saw we spoke about the g 90 shop visits being 100 shop visits higher, g n x kind of, you know, the growth in installed base there. So it's it's the same it's it's the exact same replica on the on the white body side. So I think it's a fairly broad based improvement in outlook that's giving us that, you know, incremental $4,000,000,000 of revenue versus where we would march in overall about $8,000,000,000 of revenue growth on services between now and and 2028, which which is driving the profit.

[Blaire Shoor, Head - IR at GE Aerospace]

Liz, we have time for one last question.

[Operator]

This question comes from Noah Poponak with Goldman Sachs.

[Noah Poponak, Analyst at Goldman Sachs]

Hey. Good morning, everyone.

[Rahul Ghai, SVP & CFO at GE Aerospace]

Good morning, Noah.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Good morning, Noah.

[Noah Poponak, Analyst at Goldman Sachs]

Can you hear me okay?

[Noah Poponak, Analyst at Goldman Sachs]

I just landed in the airport. It's a bit noisy.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Loud and clear. Hopefully, you were on a GE engine.

[Noah Poponak, Analyst at Goldman Sachs]

I was powered by the LEAP one b, so that's that's a win.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

K. Thank you for your question.

[Noah Poponak, Analyst at Goldman Sachs]

I wanted to ask, you know, we've been in this world where air travel growth has been decelerating, the aftermarket growth has not. You know, part of that is the aging of the fleet. A lot of that is pent up demand that's being created by part component labor availability and then the pricing that that creates, all of which you've alluded to to different degrees. And so I was I wonder if you can quantify the duration of the pent up demand.

[Noah Poponak, Analyst at Goldman Sachs]

Will it take you one, two, three years to get through that? And when you built the twenty five to twenty eight framework, are you assuming all of that pent up demand and the price that comes with it versus did you just assume the normal core algorithm of the fleet becomes the shop visits in a in a normal world?

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Well, it's it's it's a it's a hard question to answer quantitatively. I think you touched on many of the factors that work in in the business' favor and our favor. You didn't touch on our increased share cycles, right, which helps lever up the the underlying installed base growth. And not only are some of these foundational platforms like the CFM 56 or the GE 90 staying in service longer, they're approaching those, higher calorie shop visits as well, which is another positive mix, mix effect. But I think with respect to the the outlook here, Noah, it it's really I think looking at what we can, what we need to do to satisfy that $175,000,000,000 backlog, Right?

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Which is maybe the the one quantitative way that catches most of of what we've just touched on. And in turn, we're we're clearly gonna be working that down over the next three years. Is is is whatever is pent up there flushed in three years, five years? I think that's that's hard to tell. Right?

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

So many moving pieces. But, again, even in this environment, to look at that backlog, to see what we're seeing on the part of customers with respect to existing fleets, let alone their their skylines, their fleet plans, we we come forward today with a revised update largely on the back of confidence born of of that backlog and their plans.

[Noah Poponak, Analyst at Goldman Sachs]

Okay. And, Larry, maybe if I could sneak one in on the OE side just since I'm last here. It's sort of been asked, but just has something specifically and singularly broken wide open in in the supply chain improvement process? Because you you sound a lot better. You know, we see the Boeing numbers are finally clicking into the rates they've talked about, maybe even a little faster than they last said.

[Noah Poponak, Analyst at Goldman Sachs]

Was there one bottleneck that's now solved, or is this just sort of the triangulation of the many different efforts that have been ongoing?

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

No. I wish it would have been one bottleneck. We'd have we'd have stopped talking about this a long time ago. Right? But it's a moving target because the volumes keep increasing, thankfully.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

And it's never been about one commodity, one supplier. Again, we wish it were so simple. I think in terms of what we can control between Flight Deck and our new technology and operations organization, we're better at deploying lean lean principles, and we've got an outstanding team working more closely together deep in the organization, deep with suppliers to put those tools to their highest and best use. And, again, that's why we cite the input progress. You see that in turn in the output numbers that we've cited throughout the the call here.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

But more to do. So we'll be talking about supply chain, again, I think for the next several years, but I'm really encouraged and frankly proud of what our team has done. Again, a shout out to the supply base who's been there, virtually every step of the way. But we all know we have this wonderful opportunity to satisfy that existing backlog while inventing the future of flight. So, we'll wrap here, and we'll get back to work.

[Blaire Shoor, Head - IR at GE Aerospace]

Larry, any final comments?

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

Blair, thanks, and thanks to you and the team for, preparing this, so, well, pretty, like, twofold now. What was gonna be in Paris and here this morning? No. I I would just say that, again, we think GE Aerospace is an exceptional franchise with real tremendous competitive advantages. The updated outlook that we provided here reinforces our optimism about our path ahead, and we think we're well positioned to deliver significant value creation for shareholders.

[Lawrence Culp, Chairman, CEO & Director at GE Aerospace]

We went long today, but we really do appreciate the time you invested in the presentation and obviously your interest in our company.

[Operator]

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.

Participants

Executives

• Blaire Shoor, Head - IR
• Lawrence Culp, Chairman, CEO & Director
• Rahul Ghai, SVP & CFO

Analysts

• Scott Deuschle, Director - Aerospace & Defense Equity Research at Deutsche Bank
• Myles Walton, Managing Director at Wolfe Research LLC
• Sheila Kahyaoglu, Aerospace & Defense and Airlines Equity Research at Jefferies Financial Group
• Douglas Harned, Managing Director at Bernstein
• Scott Mikus, Director - Aerospace, Defense & Space Research at Melius Research LLC
• Seth Seifman, Executive Director at JP Morgan
• Gavin Parsons, Director, Aerospace & Defense Equity Research at UBS Group
• Ronald Epstein, MD - Aerospace & Defense at Bank of America Merrill Lynch
• David Strauss, Managing Director - Aerospace & Defense Equity Research at Barclays
• Gautam Khanna, Managing Director at TD Cowen
• Jason Gursky, Equity Research Analyst at Citigroup
• Ken Herbert, Managing Director at RBC Capital Markets
• Noah Poponak, Analyst at Goldman Sachs