What GE Aerospace (GE) Said on Its Q3 Earnings Call

Key Points

• Strong third-quarter performance: GE Aerospace reported 18% revenue growth, a 30% increase in operating profit to $3 billion, 36% EPS growth to $2.25, and $2 billion in free cash flow. Commercial Engines & Services led results, with revenue up 21% and segment margins reaching 27.9%.
• Demand and production momentum continued: Orders rose 49%, backed by a backlog exceeding $170 billion, while improved material availability increased LEAP deliveries and reduced engine turnaround times. GE also agreed to acquire casting supplier Consolidated Precision Products to expand aerospace production capacity.
• Full-year outlook raised: GE now expects 2026 revenue growth of 19%–20%, operating profit of $10.9 billion–$11 billion, EPS of $8–$8.10, and free cash flow of $9.1 billion–$9.4 billion. For 2027, commercial services growth is expected in the low double digits, though GE9X losses are projected to create an approximately $300 million headwind.

GE Aerospace NYSE: GE raised its full-year outlook after reporting third-quarter growth in orders, revenue, profit and free cash flow, supported by continued demand for commercial engine services and improving production output.

Chairman and CEO Larry Culp said third-quarter orders increased 49%, led by a 58% gain in the Commercial Engines & Services, or CES, segment. Commercial services orders rose 23% during the quarter and 30% through the first nine months of the year. The company reported a total backlog exceeding $170 billion and said it now expects low-double-digit commercial services growth in 2027.

“Demand continues to be solid across the business, even in a dynamic environment,” Culp said. He pointed to commitments for more than 1,800 engines announced at the Farnborough Airshow, including an agreement with IndiGo for more than 1,000 LEAP-1A engines and a Turkish Airlines agreement for more than 300 LEAP-1B engines plus a long-term service agreement covering its LEAP-1B fleet.

Third-quarter financial performance

Total company revenue rose 18% in the third quarter, including 21% growth at CES and 7% growth at Defense & Propulsion Technologies, or DPT. Operating profit climbed 30% to $3 billion, while the operating margin expanded 220 basis points from a year earlier to 22.5%.

Earnings per share increased 36% to $2.25. CFO Rahul Ghai said higher operating profit contributed $0.55, or more than 90%, of the year-over-year EPS improvement. Lower corporate costs and a reduced share count also aided earnings growth, while the tax rate was roughly flat at about 15%.

Free cash flow totaled $2 billion during the quarter. For the first nine months, GE Aerospace generated $6.7 billion of free cash flow, up 13% year over year, representing 105% conversion. Ghai said higher earnings and a meaningful reduction in inventory growth supported the year-to-date result.

CES revenue increased 21%, with services revenue up 17% and equipment revenue up 38%. Internal shop-visit revenue grew 12%, while spare-parts revenue rose more than 20%, aided by improved material availability, demand in the LEAP external channel and price. Engine deliveries increased 8%, including a 5% rise in LEAP deliveries. Widebody engine deliveries rose more than 50%, while GEnx shipments nearly doubled.

CES operating profit rose 21% to $2.9 billion, and segment margin reached 27.9%. Ghai said higher services volume and pricing were partly offset by mix and inflation.

Production and service capacity initiatives

Culp said the company’s FLIGHT DECK operating system contributed to higher output and improved turnaround times. Through the first nine months, commercial services revenue rose 26% and total engine deliveries increased 21%. GE Aerospace also recorded its 10th consecutive quarter of sequential material-input growth, helping drive a 26% year-to-date increase in LEAP engine deliveries.

At its Celma maintenance, repair and overhaul site, GE Aerospace deployed an artificial intelligence-enabled tool to automate the collection of technical records for CFM56 shop visits. The company said the tool reduced record-processing time by about 25%.

Across its network, the company reported record internal shop-visit output, with turnaround time reduced by more than one week since the end of 2025. LEAP turnaround time has fallen by two weeks, according to Culp. He said LEAP engine-driven aircraft-on-ground levels had declined to nearly zero since the summer.

GE Aerospace also announced an agreement to acquire Consolidated Precision Products, a long-term supplier of castings. Culp said the acquisition is intended to expand capacity for mission-critical castings across the aerospace industry and bring product development and manufacturing closer together for next-generation airfoils. He said the company has no intention of operating CPP solely as a captive supplier.

Defense results and technology programs

DPT orders rose 18% in the quarter and revenue increased 7%. Segment profit grew 8%, with margin expanding 20 basis points to 13.7%. DPT backlog exceeded $30 billion, up more than $5 billion since the start of the year.

During the quarter, GE Aerospace received a five-year, $2.9 billion contract to support F414 engines used on U.S. Navy F-18 and EA-18G aircraft. The company also said its F143 engine, formerly known as the GEK800, was designated as a second-source propulsion system for the Joint Air-to-Surface Standoff Missile program. Its XA102 adaptive-cycle engine moved into hardware procurement and sub-component testing under the U.S. Air Force’s Next Generation Adaptive Propulsion program.

Culp also cited a high-altitude hybrid-electric flight completed with BETA Technologies under NASA’s Electrified Powertrain Flight Demonstration program.

Raised 2026 outlook and 2027 expectations

GE Aerospace raised its 2026 revenue-growth outlook to 19% to 20%, from a prior high-teens forecast. It now expects operating profit of $10.9 billion to $11 billion and EPS of $8 to $8.10. Free cash flow guidance was raised to $9.1 billion to $9.4 billion.

• CES revenue is expected to grow in the low 20% range.
• Commercial services revenue growth is projected at about $5.5 billion year over year, roughly $400 million above the prior midpoint outlook.
• CES operating profit is expected to be $10.5 billion to $10.6 billion.
• DPT profit guidance was maintained at $1.6 billion to $1.7 billion.

Ghai said the company expects more than 100% of fourth-quarter internal shop visits to already be in its shops, with additional engines waiting for induction. More than 95% of fourth-quarter spare-parts revenue was in backlog entering the period.

For 2027, GE Aerospace expects low-double-digit commercial services growth, high-single-digit DPT revenue growth and company margins generally in line with 2026. Ghai said service growth should support profit expansion, though rising original-equipment deliveries and the GE9X ramp are expected to remain offsets. The company expects GE9X losses to create an approximately $300 million year-over-year headwind in 2027, even as unit costs decline.

About GE Aerospace (NYSE:GE)

GE Aerospace NYSE: GE is a global aerospace company that designs, develops, manufactures and services aircraft engines and related systems. Its products support commercial air transport, business and general aviation, military aircraft, and other defense applications. The company also provides engine components, avionics, mechanical systems, digital solutions and maintenance, repair and overhaul services.

GE Aerospace serves airlines, aircraft operators, leasing companies, airframers and government customers worldwide.

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