GE Aerospace (GE)

FY2025 revenue grew ~14% to ~$38B, with commercial services growing 18%+ driven by record shop visits. This outpaces all major aerospace peers including RTX's Pratt & Whitney and Rolls-Royce. GE Aerospace is the fastest-growing large-cap aerospace company.

CFM's LEAP engine powers ~60% of the narrowbody fleet (737 MAX + A320neo family). GE's GE9X is the sole engine for the Boeing 777X. In military engines, GE supplies the F414 for the F/A-18 and is developing NGAD propulsion. The installed base of 44,000+ commercial engines creates a decades-long aftermarket annuity.

Aftermarket services pricing power is extraordinary — airlines have no choice but to service their engines with GE-authorized parts and shops. Long-term service agreements lock in pricing escalators. OE (original equipment) pricing is competitive but the aftermarket subsidizes initial engine discounts. GE has raised services prices 5-8% annually.

The LEAP engine is executing well on its production ramp, though supply chain constraints have limited deliveries. The GE9X program has faced delays tied to Boeing 777X certification. The RISE open-fan engine program (targeting 2035 entry) is ambitious but decades away from revenue. Innovation cycles in aviation are inherently long.

Airlines cannot switch engine manufacturers on existing aircraft — the engine is certified as part of the airframe. Once an airline selects LEAP for its A320neo fleet, it's locked into GE/CFM for the 25-30 year life of those aircraft. This is the highest switching cost in industrial markets.

Fleet commonality drives a modest network effect — the more airlines that operate LEAP engines, the more MRO infrastructure and spare parts availability expands, making it easier for other airlines to choose LEAP. The MRO network is global with 100+ authorized service providers.

FAA/EASA engine certification takes 5-8 years and costs billions. GE holds thousands of patents on turbine blade metallurgy, combustion technology, and digital twin analytics. ITAR restrictions prevent technology transfer. The regulatory and IP barriers to jet engine development are among the highest in any industry.

Developing a new commercial jet engine costs $10-15B over 15-20 years. Only three companies globally (GE, Pratt & Whitney, Rolls-Royce) can make this investment. GE's installed base of 44,000+ engines generates the cash flow to fund next-generation development, creating a self-reinforcing cycle that no new entrant can penetrate.

FY2026 EPS estimates have been revised up ~10% as aftermarket services continue to surprise to the upside. The Street models 15-18% EPS growth driven by services mix shift and operating leverage. GE Aerospace has beaten estimates in every quarter since the spinoff.

The post-spinoff narrative is 'best pure-play in aerospace.' Air travel demand remains robust globally. The concern is Boeing production issues limiting new engine deliveries and potential geopolitical disruptions to international travel. LEAP production ramp execution is closely watched.

CEO Larry Culp orchestrated GE's transformation from bloated conglomerate to focused aerospace pure-play — one of the most successful turnarounds in industrial history. Now the question is whether Culp stays long-term and whether the post-spin capital allocation (dividends, buybacks) is optimal. The company is still building its track record as an independent entity.