Valuing Aerospace (EV/EBITDA, FCF)
How to compute EV/EBITDA for aerospace peers: match the EBITDA basis to the filer, business-model bands, and why Boeing's and GE's FCF diverge.
Educational analysis for professional use. This guide is not investment advice or a recommendation to buy or sell any security, and it is not personalised.
Split the Business Model Before You Apply a Multiple
Commercial aerospace names do not belong on one peer-multiple line. OEM airframers in ramp trough can show negative segment margins and negative FCF while engine and proprietary-parts suppliers print high-teens to mid-50s EBITDA margins and strong cash conversion. EV/EBITDA only works after you match the EBITDA basis to the filer and classify the revenue mix.
FY2025 filed cash flow makes the point: Boeing ($1.9B) FCF on 600 deliveries; GE Aerospace $7.7B FCF on 71% services revenue. Same industry, different valuation lens.
Boeing and GE Post FY2025 Cash Flow at Opposite Ends
| Company | FY2025 FCF | Business-model read |
|---|---|---|
| GE Aerospace | $7.7B | Aftermarket-heavy engine/services |
| Airbus | €4.8B | OEM leader at positive margin; net cash |
| Safran | €3.9B | Engine OE + aftermarket blend |
| Howmet | $1.4B | Components; OE-heavy, spares growing |
| TransDigm | ~$1.8B | Proprietary parts; high leverage |
| Boeing | ($1.9B) | OEM ramp trough |
GE targets >100% FCF conversion through 2028 (Investor Day). That framing fits services-weighted engine economics. Boeing’s negative FCF with ~1.96× unit book-to-bill (new orders against units delivered) is the ramp/working-capital story, not a demand collapse.
One Filer’s Arithmetic Shows the Method; It Doesn’t Transfer Directly
Market caps as of 9-10 Jun 2026; EUR filers converted at stated FX dates.
GE Aerospace shows the computation in full. Operating profit* $9.1B plus D&A $1.1B gives EBITDA of about $10.1B; enterprise value of roughly $354.7B (market cap ~$346.6B plus net debt ~$8.1B) divided by that EBITDA gives ~35×.
The same arithmetic will not work for every filer without adjustment. Boeing does not report EBITDA, so the closest proxy is operating income $4.3B plus D&A $2.0B, about $6.2B, but FY2025 was a BCA segment-margin trough at −17.1%. Dividing enterprise value by that depressed proxy prices a temporarily low earnings base rather than the business’s normalised capacity. GE’s proxy carries no equivalent distortion, because it sits on a 71%-services revenue mix rather than an OEM ramp. The two need normalising differently before their multiples mean the same thing.
Typical valuation bands on filed EBITDA:
| Business model | EV/EBITDA band |
|---|---|
| OEM-heavy airframers | ~12-18× |
| Engine / aftermarket | ~18-25× |
| Proprietary sole-source parts | ~20-55× |
Computed multiples on filed or proxy EBITDA ranged from the high teens to the mid-40s across the four non-OEM filers; the two OEM airframers need earnings normalisation, as above, before a multiple is informative. Damodaran US Aerospace/Defense median 21.58× (Jan 2026) blends defence, so treat it as context rather than a commercial aftermarket ceiling.
No Two Filers Report Profit on the Same Basis
| Filer | Reported profit measure | FY2025 value |
|---|---|---|
| Boeing | Operating income + D&A (proxy) | $4.3B + $2.0B ≈ $6.2B |
| Airbus | EBIT Adjusted | €7.1B |
| GE | Operating profit* + D&A | $9.1B + $1.1B |
| Safran | Adjusted EBITDA | €6.3B |
| Howmet | Adjusted EBITDA | $2.4B (29.3% margin) |
| TransDigm | EBITDA As Defined | $4.8B (53.9% of net sales) |
Do not divide EV by Boeing GAAP operating income during a BCA loss year without normalising to mid-ramp margin. Airbus 10.4% Commercial EBIT Adjusted margin and €12.2B net cash are the through-cycle inputs a normalised OEM-heavy multiple would use; Boeing needs the equivalent normalisation before the two are comparable.
Non-USD filers: Airbus at EUR/USD 1.1554 (10 Jun 2026); Safran at 1.1549 (10 Jun 2026). State FX date when screening USD peers.
Aftermarket Mix Drives the Multiple
Revenue mix explains why multiples cluster by model type:
| Company | Aftermarket / services share | Key margin |
|---|---|---|
| GE | Services 71% (CES 75%) | CES 26.6% |
| Safran Propulsion | Aftermarket 64.6% | 23.0% recurring OM |
| TransDigm | Commercial aftermarket 31.8% (+ defence 42.6%) | 53.9% EBITDA As Defined |
| Howmet | Spares ~21% | Engine Products 33.3% Adj. EBITDA |
| Boeing | Services 16% (BGS) | BCA −17.1% / BGS ~18.5% |
| Airbus | Services 11% | Commercial 10.4% EBIT Adjusted |
Higher aftermarket mix correlates with higher filed margins and a higher EV/EBITDA within these bands. The OEM vs aftermarket guide covers how those segment margins compare across the peer set; the installed-base guide covers GE ~45,000 engines and CES backlog ~90% services.
The Same Aftermarket Story Carries Very Different Balance-Sheet Risk
GE Aerospace (~$346.6B cap) carries 1.44×** book-to-bill and **$190B of backlog behind its FCF. The GE profile walks through what sits behind that backlog.
Safran (~€121.9B cap) holds €1.7B of net cash and LEAP deliveries of 1,802 units for FY2025. See the Safran profile.
TransDigm ($70.3B cap) runs the same high-margin aftermarket model on **$27.2B** of net debt instead. See the TransDigm profile for how that leverage is structured.
Airframers need normalised OEM earnings and backlog-to-rate screens before a consolidated multiple is informative. Start with FCF and segment margins, then reach for EV/EBITDA.
Model Defaults and Rates
Worked-example parameters (illustrative assumptions):
| Example | Parameter | Value |
|---|---|---|
| OEM airframer | Narrowbody backlog units | 7,000 |
| OEM airframer | Annual deliveries | 750 |
| OEM airframer | Book-to-bill | 1.1× |
| OEM airframer | Normalised EBIT margin | 10% |
| Engine aftermarket | Services mix | 70% |
| Engine aftermarket | Operating margin | 25% |
| Engine aftermarket | EV/EBITDA screen | ~22× |
DCF sensitivity uses illustrative planning rates: 10-year UST 4.50%, BBB OAS 150 bps, model discount rate 9.0% nominal. Check current rates when modelling.
Classify the Business Model Before Any Multiple Means Anything
- Classify business model (OEM ramp, engine aftermarket, proprietary parts).
- Match EBITDA basis to the filer’s filed measure.
- Check FCF before applying a peer multiple (Boeing vs GE divergence).
- Place the multiple inside the appropriate band for that model type.
- For OEM names, normalise margin toward ramp steady state (~10% illustrative example near Airbus 10.4%) before EV/EBITDA.
A single Damodaran 21.58× median does not replace the split between ~12-18× OEM-heavy and ~18-55× aftermarket/proprietary screens. The multiple follows the mix.
Commercial Aerospace Sector Primer
Delivery rates and the aftermarket annuity are the inputs. This primer takes them to a dual-rate sum-of-the-parts and an EV/EBITDA you can defend.
The Excel model is the primer's two dual-rate sum-of-the-parts builds live across 12 sheets: original equipment capitalised at a cyclical rate, the installed-base aftermarket at a lower annuity rate, summed to enterprise value. Change the delivery rate, the aftermarket dollars per unit or either discount rate and the value per share moves.
Frequently Asked Questions
- Why can Boeing have negative FCF while GE prints $7.7B?
- OEM airframe ramps consume working capital, carry certification and quality-recovery costs, and can run negative segment margins (Boeing BCA −17.1% in FY2025). GE Aerospace's Commercial Engines & Services business is 75% services revenue at a 26.6% operating margin, on an installed base of ~45,000 commercial engines. FY2025 FCF was ($1.9B) at Boeing versus $7.7B at GE. Business model drives cash conversion more than delivery count alone.
- How do you compute an EV/EBITDA multiple for a commercial aerospace filer?
- GE Aerospace's own FY2025 arithmetic: operating profit* $9.1B plus D&A $1.1B gives EBITDA of about $10.1B; against an enterprise value of roughly $354.7B (market cap and net debt as of 9-10 Jun 2026), that computes to ~35×. Business-model EV/EBITDA bands run, on filed or proxy EBITDA: OEM-heavy airframers ~12-18×; engine/aftermarket ~18-25×; proprietary sole-source parts ~20-55×. These are general ranges rather than a placement for any one filer; where a filer's EBITDA proxy sits at a cyclical trough, such as Boeing's BCA segment during its FY2025 ramp, the multiple needs normalising before it means anything. Damodaran's US Aerospace/Defense median was 21.58× (Jan 2026); that blends in defence names and serves only as outside context.
- What EBITDA basis should you use for each filer?
- Boeing does not report EBITDA; use operating income $4.3B + D&A $2.0B = ~$6.2B proxy. Airbus uses EBIT Adjusted €7.1B. GE uses operating profit* $9.1B + D&A $1.1B. Safran adjusted EBITDA €6.3B. Howmet adjusted EBITDA $2.4B. TransDigm EBITDA As Defined $4.8B. Match the filer's reported profit measure before computing EV/EBITDA.
- What is GE's FCF conversion target?
- GE Aerospace targets greater than 100% FCF conversion through 2028 (Investor Day). FY2025 FCF was $7.7B on a high-margin, services-heavy mix. Aftermarket-heavy names emphasise FCF conversion in screening; OEM-ramp names need normalised earnings and a rate-path assumption before multiple or DCF work.