GE Aerospace NYSE: GE reported a strong start to 2026 in its first-quarter earnings call, while also updating investors on how the company is planning for uncertainty tied to the conflict in the Middle East and broader macro volatility. Chairman and CEO Larry Culp said the company is “embracing today’s reality,” emphasizing that safety remains the top priority as GE supports teams in the region and customers globally.
First-quarter results: orders, revenue, profit and cash all rose
GE Aerospace posted significant growth across key financial metrics in the quarter. Culp said orders rose 87% year-over-year, with Commercial Engines & Services (CES) “nearly doubling” and Defense & Propulsion Technologies (DPT) up 67%, which he said included “record defense orders for this decade.” Revenue rose 29%, operating profit increased 18%, and earnings per share rose 25% to $1.86. Free cash flow increased 14% to $1.7 billion.
CFO Rahul Ghai said operating profit was $2.5 billion, up about $380 million, driven by “services volume and price.” He noted total company margins fell 200 basis points to 21.8%, attributing the decline to “installed engine growth, investments, and inflation.” Ghai also highlighted that the tax rate fell 3 points to 14.7% due to earnings mix and benefits from recent tax legislation, and that share count declined by 24 million from previously announced capital allocation actions.
Middle East conflict leads to lower departures outlook, but 2026 guidance held
Culp said global departures were up low single digits in the first quarter, including a high single-digit decline in the Middle East, which he said represents about 5% of GE’s departures. For the rest of the year, GE evaluated multiple scenarios and is now assuming the conflict and its effects continue through the summer. As a result, the company reduced its full-year departures outlook from mid-single-digit growth to “flat to low-single-digit growth,” including a low double-digit decline in the Middle East and modest reductions elsewhere.
Despite the lower departures outlook, management said it expects limited impact to 2026 services results due to the lag between air traffic changes and aftermarket demand, along with GE’s backlog and current visibility. “Overall, we expect a limited impact on services revenue and profit in 2026,” Culp said, adding the company is holding guidance “across the board” given macro uncertainty, though it is “trending toward the high end of that range.”
Ghai reiterated that stance, maintaining full-year guidance for low double-digit revenue growth, operating profit of $9.85 billion to $10.25 billion, EPS of $7.10 to $7.40, and free cash flow of $8.0 billion to $8.4 billion. The guidance assumptions include elevated fuel prices through the third quarter with a decline to current levels by year-end, near-term fuel availability impacts in certain regions, and slower GDP growth affecting travel demand; Ghai emphasized the outlook “doesn’t contemplate a global recession unfolding.”
Backlog, spare parts constraints, and shop-visit visibility
A central theme of the call was strong aftermarket demand and the company’s efforts to increase output. Culp said GE’s commercial services backlog exceeds $170 billion, up nearly $30 billion since the end of 2024, and he added that spare parts demand continues to exceed supply even after more than 25% services revenue growth over the last five quarters.
Since the beginning of March, Culp said spare parts orders were up more than 30% year-over-year, and sequentially flat versus the first two months of the first quarter. However, he also flagged mounting execution strain: spare parts delinquency—delayed shipments due to material constraints—has risen about 70% since the end of 2024. Entering the second quarter, Culp said GE has “more than 95% of spare parts revenue already in backlog.”
On shop visits, which he said represent about 60% of services revenue, Culp noted that roughly two-thirds of engines due for GE’s projected 2026 shop visits are already off wing, either in GE shops or awaiting induction. He said the pipeline of planned removals in the second and third quarters, combined with engines currently off wing, exceeds GE’s shop-visit guide, which management said supports confidence in 2026.
During Q&A, analysts asked whether customers were “pre-buying” spare parts amid concerns of future disruptions. Culp said GE has not seen evidence of pull-forward behavior and instead pointed to broad demand and continued delinquency as signs demand is still outpacing supply.
Segment performance: CES led by services; DPT supported by defense demand
In CES, Ghai said orders grew 93%, with services up 49% and equipment more than tripling to nearly $8 billion. CES revenue increased 34%, including 39% growth in services and 20% growth in equipment. He said engine deliveries rose 50% overall, including LEAP deliveries up 63%, and widebody deliveries up more than 25% driven by GEnx. CES profit rose to $2.4 billion, up nearly $450 million, helped by higher volume and price and the absence of prior-year charges related to estimated profitability on long-term service agreements.
CES margins fell 230 basis points to 26.4%. Ghai attributed the decline primarily to “installed engine growth,” including GE9X shipments, and investments, noting that installations increased faster than spare engine volume.
In DPT, Ghai said orders increased 67%—including T408 engines for the U.S. Marine Corps CH-53K—and defense book-to-bill was above 2x for the second consecutive quarter. DPT revenue grew 19% and profit rose 17%, while margins dipped 20 basis points to 11.8% due to mix, investments, and inflation.
GE also discussed specific program and technology developments, including its RISE open-fan work. Culp said GE, together with the Civil Aviation Authority of Singapore and Airbus, established “the world’s first airport test bed for open fan technology” as part of RISE, intended to validate performance in real-world airline environments.
On the GE9X, Culp said there is “no change on schedule, no change on losses,” after GE identified a durability issue with the mid-seal in January. He said GE believes it is at root cause and is finalizing a modification, and that it has been transparent with Boeing and the FAA. Deliveries are expected to be more second-half weighted as GE modifies tooling and ramps suppliers for the modified part.
Looking ahead, management emphasized continued output improvement efforts through its “FLIGHT DECK” operating system, supplier collaboration, and investments, including plans to invest $1 billion in U.S. manufacturing sites and supply base for a second consecutive year and $100 million in external suppliers for equipment and tooling. Culp said GE’s more than $210 billion backlog and ongoing actions position the company to manage near-term uncertainty and continue delivering for customers.
About GE Aerospace NYSE: GE
GE Aerospace NYSE: GE is the aerospace business of General Electric, focused on the design, manufacture and support of aircraft engines, integrated propulsion systems and related aftermarket services. The company serves commercial airlines, airframers, business and general aviation operators, and defense customers, providing propulsion solutions for a broad range of aircraft types from single‑aisle airliners to widebody and military platforms.
Its product portfolio includes a family of commercial and military jet engines as well as spare parts, components and systems engineering.
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