GE Aerospace Q2 Earnings Call Highlights
Key Points
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- GE Aerospace posted strong Q2 2026 results, with orders up 17%, revenue up 24%, EPS up 22% and free cash flow up 43%, then raised its full-year outlook across revenue, profit, EPS and cash flow.
- Commercial services were a major growth driver, with services orders up 22% and the segment backlog reaching about $170 billion, giving the company visibility into continued demand even as some supply constraints remain.
- The company also highlighted operational gains and defense momentum, including faster production and turnaround times, LEAP durability improvements, and a Defense and Propulsion Technologies backlog above $30 billion after new engine program wins.
GE Aerospace (NYSE:GE) reported double-digit growth across key second-quarter 2026 metrics and raised its full-year outlook, citing strong commercial services demand, improved operating execution and a backlog that management said provides visibility into the rest of the year.
Chairman and CEO Larry Culp opened the call by saying CFM International is supporting Ryanair in the investigation into Flight 1879. “Safety is our top priority at all times,” Culp said, adding that the company’s thoughts are with the passengers, pilots and crew on board.
For the second quarter, Culp said total orders rose 17%, revenue increased 24%, operating profit grew 18%, earnings per share increased 22% and free cash flow rose 43%, with conversion above 140%. He said the results capped an “exceptional first half,” with orders up 49%, revenue up 27%, EPS up 24% and free cash flow up 31%.
Commercial Services Drive Growth
CFO Rahul Ghai said second-quarter operating profit was $2.7 billion, up 18%, driven by services volume and price. EPS was $2.02, up 22%, reflecting higher operating profit, a lower tax rate and a reduced share count. Free cash flow was $3 billion, up 43%, helped by higher earnings and an approximately $200 million reduction in working capital and advances and progress collections.
In the Commercial Engines and Services segment, orders rose 18%, with services orders up 22%. Segment revenue increased 27%, including 26% services growth. Ghai said internal shop visit revenue grew 25%, including LEAP internal shop visits up more than 50%, while spare parts sales increased more than 25% due to improved material availability, LEAP external channel growth and price.
Despite the strong shipment growth, Ghai said spare parts delinquencies increased 20% sequentially in the quarter, reflecting continued material availability constraints. Commercial equipment revenue grew 30%, with engine deliveries up 26%, including LEAP deliveries up 24%.
Commercial Engines and Services profit rose 20% to $2.7 billion. Margins declined 160 basis points to 27.3%, which Ghai attributed to installed engine growth, GE9X investments and inflation.
Defense and Propulsion Backlog Expands
In the Defense and Propulsion Technologies segment, orders increased 12%, revenue grew 16% and profit rose 18%. Ghai said defense book-to-bill was 1 in the quarter and 1.7 in the first half. Total DPT backlog exceeded $30 billion, up about $5 billion since the start of the year.
Culp highlighted several defense-related developments, including an agreement with Turkish Aerospace Industries to provide F404 engines for the HÜRJET advanced jet trainer program and the selection of CT7 engines for the U.K. Ministry of Defence’s new medium helicopter program.
He also said the company completed an assembly readiness review for the XA102 adaptive cycle engine, moving the program from design into assembly and test. Culp said GE Aerospace continues to advance technologies for the collaborative combat aircraft market, with the GEK1500 and GE426 reaching milestones toward preliminary design review.
Company Raises 2026 Guidance
GE Aerospace raised its full-year 2026 outlook across revenue, profit, EPS and free cash flow. Ghai said the company now expects overall revenue to grow in the high teens, up from a prior outlook of low double-digit growth.
- Commercial Engines and Services revenue is expected to grow around 20%, up from a prior mid-teens outlook.
- Commercial services revenue is expected to grow in the low 20% range, up from a prior mid-teens outlook.
- Commercial equipment revenue is expected to grow around 20%, with LEAP deliveries up in the high teens.
- Defense and Propulsion Technologies revenue is expected to grow in the low double digits.
- Operating profit is expected to be between $10.55 billion and $10.75 billion.
- EPS is expected to be between $7.65 and $7.85.
- Free cash flow is expected to be between $8.9 billion and $9.2 billion.
Ghai said the commercial services backlog stands at roughly $170 billion, up nearly $30 billion since the end of 2024. He said the company is entering the third quarter with more than 95% of spare parts revenue in backlog, similar to the second quarter, and that engines already off wing plus planned third-quarter removals exceed the company’s full-year shop visit guide by more than 40%.
Operational Improvements and LEAP Durability
Culp said the company’s FLIGHT DECK operating model is helping improve safety, quality, delivery and cost. He cited a roughly 60% reduction in production lead time for a critical F110 component in Lynn, Massachusetts, and a nearly 50% reduction in CFM56 final assembly lead time at the Celma maintenance, repair and overhaul site in Brazil.
Culp also said the company used artificial intelligence to automate parts of its demand signal process across turbine airfoils, cutting the number of demand signals in half and reducing processing time by nearly 90% across 190 parts. He said priority supplier material input increased double digits sequentially and year-over-year again in the second quarter.
On the LEAP engine program, Culp said GE Aerospace recently completed certification for the LEAP-1B durability kit, including an upgraded high-pressure turbine blade. He said the kit is expected to deliver roughly a twofold improvement in time on wing, with full MRO and new engine cutover expected early next year. LEAP turnaround times are now around 100 days, down more than two weeks year-over-year, and Culp said the company has reached “nearly zero” grounded LEAP-powered aircraft due to engines.
During the question-and-answer session, Culp said customer behavior has not changed despite a dynamic macroeconomic environment, and that service orders remain robust. Ghai said commercial services momentum should carry into 2027, while Culp said services growth is more constrained by supply than demand.
Asked about free cash flow, Ghai said the company expects cash flow to grow with earnings, though conversion should normalize over time. On margins, he said pressures from installed engine growth, LEAP services ramp-up and GE9X losses are timing-related, and that both Commercial Engines and Services and total company margins are expected to expand in 2028 and beyond.
Culp closed by saying the company’s priorities remain delivering for customers, improving time on wing and lowering cost of ownership, with FLIGHT DECK helping turn those goals into measurable results.
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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