GE Aerospace lifts 2026 outlook on 43% jump in Q2 free cash flow
GE Aerospace raised its full-year guidance after a 43% surge in second-quarter free cash flow signaled that commercial aviation services demand is offsetting lingering supply chain constraints.
GE Aerospace posted double-digit growth across its key second-quarter metrics, prompting the company to lift its full-year outlook for revenue, profit, earnings per share, and cash flow. Free cash flow jumped 43% to $3 billion, driven by higher operating earnings and a $200 million reduction in working capital.
The cash generation was underpinned by a surge in commercial aviation services, which are commanding higher prices and volumes as material availability improves. Services orders climbed 22%, while internal shop visit revenue grew 25%. Maintenance demand for LEAP engines was particularly strong, with internal shop visits surging more than 50%, external channel growth expanding, and spare parts sales rising over 25%.
Overall second-quarter revenue increased 24%, operating profit grew 18% to $2.7 billion, and earnings per share rose 22% to $2.02. CFO Rahul Ghai noted that the EPS growth reflected the higher operating profit alongside a lower tax rate and a reduced share count. CEO Larry Culp characterized the results as capping an "exceptional first half," with first-half orders up 49% and free cash flow up 31%.
For investors, the primary takeaway is the durability of the revenue pipeline despite ongoing supply chain bottlenecks. The Commercial Engines and Services backlog reached approximately $170 billion, providing clear visibility into future demand. The defense business also contributed to this buffer, with the Defense and Propulsion Technologies backlog exceeding $30 billion following recent engine program wins.
This massive combined backlog acts as a critical hedge against macroeconomic volatility, assuring the market that near-term revenues are largely secured. Management emphasized that operational gains, such as faster production turnaround times and LEAP durability improvements, are accelerating the conversion of that pipeline into cash.
Culp opened the call by noting CFM International is supporting Ryanair in the investigation into Flight 1879, stating, "Safety is our top priority at all times."
