GE Aerospace (GE) — BATS 29/100 — 2026-07-16

Listen to the earnings call audio for free on StockAnalysis

Summary based on General Electric Company earnings call on 2026-07-16

BotFlo AI Transformation Score for $GE: 29 (29/100)

Sector AI Transformation Score for $GE: 10 (10/50)

Presentation

(1/6) Q2 2026 results and raised full-year outlook
• 📈 Orders rose 17%, revenue 24%, operating profit 18%, EPS 22%, and free cash flow 43% with conversion over 140%.
• 💰 First-half strength included orders up 49%, revenue up 27%, EPS up 24%, and free cash flow up 31% with 115% conversion.
• 📊 Given first-half results and momentum, GE Aerospace raised 2026 guidance across the board.

(2/6) FLIGHT DECK operations and AI as force multiplier
• 🏭 FLIGHT DECK cut F110 critical-component lead time roughly 60% and reduced Selma final-assembly lead time nearly 50%, improving shop-visit turnaround about a week.
• 🤖 AI is a force multiplier for FLIGHT DECK; after standardizing demand signals, AI automation cut signals in half and processing time nearly 90% across 190 parts.
• 📦 Priority supplier material input rose double digits sequentially and year-over-year, supporting commercial services revenue up 32% in the first half and engine deliveries up 31%.

(3/6) Commercial aftermarket, LEAP durability, and demand
• ✈️ Aftermarket demand remained resilient with commercial services backlog roughly $170 billion and LEAP selected by Copa for up to 120 LEAP-1B engines.
• 🔧 LEAP-1B durability kit certification, including upgraded HPT blade, is expected to deliver about a twofold improvement in time on wing with full cutover early next year.
• ⏱️ LEAP turnaround times are around 100 days, down over two weeks year-over-year, with nearly zero grounded LEAP-powered aircraft due to engines.

(4/6) Next-gen flight technology and defense milestones
• ⚡ Through NASA EPFD, GE completed a ground test for the megawatt-class hybrid electric demonstrator and expanded work with Beta Technologies.
• 🛡️ Defense wins include F404 engines for Turkish Aerospace HURJET and CP7 selection for the U.K. new medium helicopter program.
• 🚀 XA-102 adaptive cycle engine completed assembly readiness review, and GEK 1500 and GE426 moved toward preliminary design review for CCA applications.

(5/6) Segment financials and raised 2026 guidance detail
• 📈 CES revenue rose 27% with services up 26%; DPT revenue grew 16% and profit 18%, with total DPT backlog over $30 billion.
• 💵 Full-year revenue outlook moved to high teens; CES around 20%; commercial services low 20s; operating profit $10.55–$10.75 billion; EPS $7.65–$7.85; FCF $8.9–$9.2 billion.
• 🔍 More than 95% of spare-parts revenue is in backlog for Q3 and engines off-wing plus planned removals exceed the full-year shop-visit guide by over 40%.

(6/6) Competitive advantages and closing priorities
• 🌐 GE cites the industry’s largest fleet of 80,000 engines, more than 2.3 billion flight hours, roughly $3 billion annual R&D, and over $1 billion CapEx.
• 🛠️ FLIGHT DECK turns strategy into results with focus on safety, quality, delivery, and cost always in that order.
• 🎯 Management is confident the team will deliver exceptional value to customers and shareholders.

Q&A

(1/12) Q&A: Macro assumptions and services growth embedded in guidance
• 🌍 Management says the environment remains dynamic but customer behavior has not changed and service orders stay robust.
• 📈 Full-year commercial services guide was raised to low-20s growth, implying about $5 billion year-over-year services growth.
• 📦 Visibility includes 95% of spare parts in Q3 backlog and shop visits oversubscribed by about 40%.

(2/12) Q&A: Free cash flow conversion sustainability as earnings grow
• 💰 Q2 free cash flow was $3 billion, up 43%, with working capital reduced even amid 24% earnings growth.
• 📊 The FCF guide raise of about $650 million is roughly half earnings and half working capital, with over 100% conversion expected in the back half.
• 📉 Cash flow should grow with earnings while conversion normalizes over time.

(3/12) Q&A: Demand pull-forward risk and supply as a governor on services
• 🔗 Supply-chain progress includes nine consecutive quarters of double-digit increases from critical suppliers and deeper joint problem-solving.
• ⚠️ Looking to the back half, 2027, and beyond, the challenge is more supply-side than demand-side.
• 📈 Installed-base growth, work scope, price, and reducing delinquent backlog support continued double-digit commercial services growth medium term.

(4/12) Q&A: Learnings from holding guidance in Q1 amid macro tail risks
• 🧠 Management would play April the same way given fresh conflict uncertainty about customer behavior.
• 💪 Pandemic lessons and IATA tone support preparing for demand returning sooner and potentially stronger after uncertainty.
• 🛠️ With robust backlog and demand, GE continued to invest, procure, and advance FLIGHT DECK rather than pause.

(5/12) Q&A: Shop-visit profile and LEAP durability kit implications
• 🔧 Shop visits are expected to grow at about a 25% CAGR to 2030, driven mainly by today’s installed base.
• 🏭 External channel should rise toward about 30% of services by 2030, with repair CAGR over 20% helping lower shop-visit cost.
• ⏱️ Over 40% of LEAP-1A fleet has the durability kit; LEAP-1B certification enables 2027 cutover, with multiyear retrofits and little pull-forward of shop visits.

(6/12) Q&A: Work-scope trends supporting future services growth
• 📈 Work scope rises with natural aging as growth platforms move from quick turns to first performance-restoration visits.
• ✈️ On GE90, about 70% of the installed base has yet to see shop visit two, a significant work-scope step-up.
• 🔩 CFM56 work scopes remain stable; growth is from volume, price, and material availability enabling heavier scopes previously unfinished.

(7/12) Q&A: Hybrid electric opportunity for GE at Farnborough
• ⚡ Hybrid electric is one of four key pillars of the RISE technology program alongside open fan.
• 🛡️ On defense, collaboration with Beta and the turbo generator program fit multiple applications.
• 🔭 Electrification and hybrid electric are expected to become a more important part of the technology portfolio commercially and in defense.

(8/12) Q&A: Airline fuel-cost pressure and legacy engine pricing strategy
• 💵 GE recognizes airline pressure but notes airlines have largely held profitability through pricing upticks.
• 📋 Spare-parts catalog pricing approach for 2026 is consistent with last year amid GE’s own inflation and capability investments.
• 📈 Longer term, higher-priced LEAP and GEnx shop visits should show more fully from 2028–29 and help approach CFM56 profitability by 2030.

(9/12) Q&A: Incremental CES margins as operational headwinds ease
• 📉 Three margin headwinds are strong installed-engine growth, LEAP services still below portfolio margins, and GE9X early high-cost units.
• 📆 LEAP services margins should align with total services by 2028; GE9X losses are expected to peak around 2028 then improve.
• 📊 Despite headwinds, company margins are largely flat because high-margin services drive dollar growth; expansion is expected in 2028 and beyond.

(10/12) Q&A: New-generation engine cost of ownership concerns from airlines
• 👂 Customers’ cost-of-ownership and time-on-wing concerns have been heard loud and clear.
• 🛠️ Near term, LEAP AOGs are near zero via spare coverage and faster shop turnaround even before full durability-kit install.
• 🔧 Longer term, LEAP-1A and LEAP-1B durability kits and fleet retrofits are required so ownership issues become a thing of the past.

(11/12) Q&A: Reconciling Q2 services growth with mid-quarter spares order commentary
• 📦 Spare parts are about 40% of services; mid-quarter ~40% spares order rates normalized from unsustainably high levels late in Q1/early Q2.
• 📈 First-half service orders still rose about 34%, an acceleration versus prior-year periods.
• ⚠️ Delinquency is up about 20% even with strong orders, underscoring that demand exceeds supply progress.

(12/12) Q&A: Spare engine ratio and buying patterns with durability improvements
• ✈️ Spare engine shipments continue to grow even as ratios normalize with higher installed-engine shipments.
• 📊 LEAP life-of-program spare ratio is in the low double digits, close to the 10–12% maturity expectation.
• 📉 Gradual normalization should continue into 2027, reaching run-rate by year exit.