GE Aerospace raises 2026 outlook on robust services demand
GE Aerospace has lifted its full-year 2026 profit and free cash flow guidance, driven by a $170 billion services backlog and operational gains from AI, though supply chain constraints persist.
GE Aerospace raised its full-year 2026 financial guidance across the board on the back of a 24% revenue jump in the first half. The company now expects operating profit between $10.55 billion and $10.75 billion, while free cash flow guidance has been upgraded to a range of $8.9 billion to $9.2 billion.
The upgraded outlook is anchored by a surge in commercial services, where revenue grew 32% in the first half. Management upgraded its services growth forecast to the low 20s for the year, supported by a massive $170 billion backlog and 95% visibility into third-quarter spare parts revenue.
Operational efficiency gains are amplifying this top-line growth. The company's FLIGHT DECK operating system slashed production lead times for critical F110 components by 60% and cut CFM56 final assembly time by half. Furthermore, strategic AI investments have automated supplier demand signals, reducing processing times by nearly 90% across 190 parts.
Hardware deliveries are also accelerating to meet resilient demand. LEAP engine delivery growth is now projected in the high teens, up from a prior target of 15%, propelled by strong narrowbody and widebody demand led by the GEnx engine. The company has also certified a LEAP-1B durability kit expected to double engine life, helping achieve a milestone of nearly zero grounded LEAP-powered aircraft.
Despite these bullish metrics, supply chain friction remains a tangible risk for investors to monitor. Spare parts delinquencies rose 20% sequentially in the second quarter, highlighting that material shortages are still capping the company's ability to fully satisfy market demand. Additionally, losses on GE9X investments and early unit shipments are expected to peak by 2028 before finally driving margin expansion.
Outside the commercial sector, GE Aerospace's defense backlog has swelled past $30 billion. This growth is underpinned by next-generation technology milestones like the XA102 adaptive cycle engine and collaborative combat aircraft products, providing a long-term revenue counterweight to commercial aviation cycles.
