GE Aerospace (GE)

Business Overview

GE Aerospace is the cleanest filed example of engine razor/blade economics at scale: sell the engine near cost, then collect on parts and labour for the next twenty-plus years. Commercial Engines & Services (CES) backlog was ~$170B of the ~$190B group total at 31 December 2025, and management stated on the Q4 2024 earnings call that ~90% of that CES backlog is services. FY2025 revenue split Equipment $12.2B and Services $30.2B company-wide; within CES alone the split was Equipment 25% and Services 75%. The market values the shares at $330.44 apiece across 1,048.8M shares in issue, roughly $346.6B, as of 9 June 2026.

The installed base numbered ~45,000 commercial engines at FY2024 (~25,000 military additionally). Engine deliveries grew 25% year-on-year in FY2025; GE does not file an absolute unit delivery count. The OEM vs aftermarket guide places GE's services mix and CES margin against IATA/Oliver Wyman engine OE (new-unit) gross margins of −5% to +10% versus MRO (maintenance, repair and overhaul) 20-35%.

List-price discounts on new engines can exceed 80%; profitability is recouped through MRO and spares over the engine life. The installed-base guide uses GE's ~45,000 commercial engines and services-heavy backlog as the quantitative anchor for that model.

How the Numbers Read

FY2025 orders were $66.2B (+32% YoY) against $45.9B revenue, a computed book-to-bill of ~1.44× (new orders relative to revenue in the period). Free cash flow was $7.7B. Net debt was ~$8.1B ($20.5B borrowings less $12.4B cash). GE targets >100% FCF conversion through 2028 per Investor Day; the same year Boeing printed ($1.9B) FCF on 600 deliveries.

GE does not disclose a services-only operating margin; 26.6% is the CES blended figure on a 75% services mix. IATA cites GE/RR MRO at ~74% / 66% of commercial engine revenue (2024) as industry context for where the economics land over a fleet life.

Valuation Framework

GE does not report EBITDA. A filed proxy is operating profit $9.1B plus D&A $1.1B, about $10.1B in FY2025. Net debt sits at ~$8.1B against that base, small relative to the $7.7B FCF the business already generates. The valuation guide walks through how to build a comparable earnings base across engine makers that do not all disclose EBITDA the same way.

The services annuity grows with the fleet, well past what FY2025's $7.7B FCF captures. As the ~45,000-engine installed base ages, more of it enters heavy shop visits, and each visit monetises parts and labour on engines GE already sold at a steep discount.

What to Watch in the Financials

CES backlog mix. ~90% services on ~$170B CES backlog (Q4 2024 call). Equipment-heavy order intake pushes razor economics forward and delays blade monetisation.

Services revenue share. 71% company-wide, 75% within CES. Hold above 70%. A drop would mean equipment is taking a larger share of CES revenue than the filed model assumes.

CES operating margin. 26.6% blended in FY2025 (26.2% in FY2024). Track whether equipment ramp dilutes the blended rate even as services dollars grow.

Book-to-bill and FCF. ~1.44× computed ratio and $7.7B FCF. Orders above revenue sustain backlog. FCF conversion against the >100% through-2028 target is the shareholder return test.

Key Risks

Equipment cycle and OEM losses. 29% equipment revenue carries new-engine pricing pressure. Heavy discounting on OE can compress near-term margins before aftermarket catches up.

CFM joint-venture economics. LEAP production is shared with Safran via CFM International. Partner dynamics and programme splits affect how orders translate to GE-consolidated revenue.

Fleet grounding or shop-visit deferrals. Installed-base monetisation depends on flying hours. Airline balance-sheet stress or prolonged groundings would slow services growth even with ~$170B CES backlog.

No filed services-only margin. 26.6% is blended, so the aftermarket margin premium over OE must be inferred; no segment footnote reports it.