High Fuel Prices Boost Engine Maker GE Aerospace's Profits
Translated & summarized from Bizportal by baba
General Electric Aerospace's third-quarter profits surged due to increased demand for aircraft maintenance and spare parts, driven by airlines keeping older planes in service longer amid limited new aircraft deliveries and high fuel costs. The company raised its annual forecast and reported a 36% rise in adjusted earnings per share. This trend benefits engine manufacturers as older fleets require more servicing, boosting GE Aerospace's substantial maintenance backlog.
The story in 5 lines · by baba
- GE Aerospace's profits rose significantly due to increased demand for maintenance and spare parts.
- High fuel prices and limited new aircraft deliveries are keeping older planes in service longer.
- The company raised its annual earnings forecast and reported a 36% increase in Q3 earnings per share.
- GE Aerospace's commercial maintenance services backlog exceeds $170 billion.
- Competitors like RTX also reported strong growth in their services segments.
General Electric Aerospace reported a significant increase in its third-quarter earnings, driven by robust demand for maintenance and spare parts. The company raised its annual forecast, now anticipating adjusted earnings per share between $8 and $8.10 in 2026, up from a previous projection of $7.65 to $7.85. Annual operating profit is expected to reach $10.9 to $11 billion, with adjusted revenues projected to grow by 19%-20%.
In the third quarter, reported revenues reached $14.1 billion, a 16% increase year-over-year. Net profit stood at approximately $2.8 billion, and adjusted earnings per share rose 36% to $2.25. New orders surged by 49% to $19 billion. The primary drivers for these improved figures were the commercial aviation engines and services division, which saw revenues climb 21% to about $10.3 billion and operating profit increase similarly to $2.9 billion.
This surge in demand for services is attributed to the current aviation market structure. Despite high jet fuel prices impacting airlines, delivery of new, more fuel-efficient aircraft remains limited relative to demand. Consequently, older aircraft are staying in service longer and require more frequent maintenance. This extended operational life of existing fleets creates sustained demand for spare parts, overhauls, and shop visits for engine manufacturers like GE Aerospace.
The company's commercial maintenance services backlog exceeds $170 billion, with most planned maintenance for the current year already covered by earlier contracts. GE Aerospace forecasts low double-digit growth for its commercial services segment through 2027. Sales of new engines also increased, with equipment revenues jumping 38% and engine deliveries up 8%, notably including LEAP engines used in Airbus A320neo and Boeing 737 MAX families.
GE Aerospace is investing over $3 billion annually in research and development. Competitors like RTX (formerly Raytheon Technologies) also reported strong results, with its revenues up 11% to $25 billion and Pratt & Whitney's services and products segment growing 21%. RTX raised its annual profit forecast and has a backlog of approximately $340 billion. In Israel, El Al is expanding its Dreamliner fleet with six additional Boeing 787-9 aircraft.