GE Aerospace beats estimates as engine demand drives outlook

GE Aerospace (GE) reported better-than-expected third-quarter earnings and revenue Tuesday as demand for commercial jet engines and maintenance services helped the aircraft engine manufacturer raise its full-year financial outlook.

Shares of GE Aerospace (GE) slipped 1% in premarket trading Tuesday. The stock had gained 1% for the year through Monday's closing price.

The Cincinnati-based company reported third-quarter revenue of $14.12 billion, up 16% from $12.18 billion a year earlier and above Wall Street's consensus estimate of $12.88 billion. Adjusted revenue, which excludes its run-off insurance operations, increased 18% to $13.29 billion.

Adjusted earnings rose 36% to $2.25 a share from $1.66 a year earlier, beating analysts' consensus estimate of $2.01 a share.

Net income from continuing operations rose to $2.41 billion, or $2.32 a share, from $2.17 billion, or $2.04 a share, a year earlier.

The results highlight how GE Aerospace (GE) is benefiting from sustained demand for commercial aircraft engines and the maintenance of existing fleets. Airlines are investing in new aircraft while keeping older planes in service, supporting demand for spare parts and engine overhauls. For investors, the growth in the company's higher-margin services business and its ability to increase engine production remain important drivers of future earnings. However, supply chain constraints and inflation continue to pressure some margins.

Commercial engine orders surge

Total orders increased 49% to $19 billion, reflecting demand across commercial and defense markets. Commercial services orders rose 23%."We are raising our 2026 guidance across the board," Chairman and Chief Executive Larry Culp said in the earnings announcement.

The Commercial Engines & Services segment reported revenue of $10.34 billion, up 21% from $8.52 billion a year earlier. Operating profit increased 21% to $2.89 billion, although its operating margin narrowed slightly to 27.9% from 28%.

Services revenue increased 17%, supported by higher maintenance volumes and more extensive repair work. Revenue from internal engine shop visits rose 12%, while spare parts revenue increased more than 20%.

Equipment revenue jumped 38% as engine deliveries increased 8%. Deliveries of LEAP engines, produced through the CFM International joint venture with France's Safran (SAFRF)(SAFRY), rose 5% during the quarter. Deliveries of the company's GEnx engines also contributed to growth.

GE Aerospace (GE) also delivered GE9X engines during the quarter, although revenue recognition for those shipments will occur after a required certification milestone.

The company's Defense & Propulsion Technologies segment reported revenue of $3.47 billion, up 7%, while operating profit increased 8% to $475 million. The segment benefited from higher equipment and services demand, including a 4% increase in defense engine deliveries.

GE Aerospace raises 2026 guidance

GE Aerospace (GE) raised its full-year adjusted earnings forecast to $8.00 to $8.10 a share, compared with its previous projection of $7.65 to $7.85.The company now expects adjusted revenue growth of approximately 19% to 20%, up from its previous forecast for growth in the high teens.

Its operating profit forecast increased to $10.9 billion to $11 billion from $10.55 billion to $10.75 billion. The company also raised its free cash flow outlook to $9.1 billion to $9.4 billion, compared with its previous range of $8.9 billion to $9.2 billion.

Despite the stronger earnings, quarterly free cash flow declined 14% to $2.04 billion from $2.36 billion a year earlier. Cash from operating activities also fell 14% to $2.2 billion.

For the first nine months of 2026, adjusted revenue increased 23% to $37.53 billion, while adjusted earnings rose 28% to $6.13 a share.

Engine backlog supports longer-term growth

GE Aerospace (GE) said it expects commercial services revenue to grow at a low-double-digit rate in 2027, supported by a commercial services backlog exceeding $170 billion.

The company also highlighted agreements for more than 1,800 engines announced at the Farnborough International Airshow, including a commitment for more than 1,000 LEAP-1A engines from Indian airline IndiGo.

In October, Turkish Airlines signed an agreement for more than 300 LEAP-1B engines, along with a long-term services agreement covering its fleet of more than 600 LEAP-1B engines.

GE Aerospace (GE) also announced an agreement to acquire Consolidated Precision Products, a manufacturer of specialized aerospace castings. The transaction is intended to expand production capacity for commercial engines, aftermarket services and defense applications.

In its defense business, the company secured a contract worth up to $2.9 billion to support F414 engines used in the U.S. Navy's F/A-18 Super Hornet and EA-18G Growler aircraft.

The company said increased supplies from priority vendors helped support production growth, although inflation and changes in its sales mix continued to weigh on commercial engine margins. Its ability to expand production and convert its substantial order backlog into revenue will remain central to sustaining earnings growth.