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    GE
    Earnings call· Mar 2026(Q1 FY26)

    GENERAL ELECTRIC Q1 FY26 earnings call GE

    Apr 21, 2026 Source

    Executive summary

    General Electric Company Q1 FY26 — Strong Start Despite Macro Headwinds, Full-Year Guidance Maintained

    GE Aerospace delivered strong Q1 FY26 results, exceeding expectations with significant growth in orders, revenue, and profit, driven by commercial services and defense. Despite reducing the full-year departures outlook due to geopolitical uncertainty, the company maintained its full-year guidance, trending towards the high end, supported by robust backlog and operational execution. Management emphasized the resilience provided by its backlog and the lag effect on services revenue from air traffic changes.

    Highlights

    7

    • Orders were up 87% in Q1 FY26, with Commercial Engines & Services (CES) nearly doubling and Defense & Propulsion Technologies (DPT) up 67%.

    • Revenue increased 29% in Q1 FY26, driven by CES services and double-digit growth in DPT.

    • Operating profit grew 18% in Q1 FY26, with both segments showing double-digit increases.

    • EPS increased 25% to $1.86 in Q1 FY26.

    • Free cash flow was up 14% to $1.7 billion in Q1 FY26.

    • Commercial services revenue was up 39% and total engine deliveries increased 43% in Q1 FY26.

    • Commercial Services backlog reached over $170 billion, up nearly $30 million since the end of FY24.

    Concerns

    5

    • Full year departures outlook reduced from mid-single-digit growth to flat to low single-digit growth due to geopolitical uncertainty.

    • Middle East departures are expected to decline low double-digits for the full year.

    • Operating margins decreased 200 basis points to 21.8% in Q1 FY26 due to installed engine growth, investments, and inflation.

    • CES margins were down 230 basis points to 26.4% in Q1 FY26, driven by installed engine growth and investments.

    • Spare parts delinquency is up roughly 70% since the end of FY24, indicating demand continues to exceed supply.

    Guidance & targets

    9
    CategoryTargetConfidence
    Full-year departures growth
    flat to low single-digit growth
    high materiality
    High
    Full-year revenue growth
    low double-digit growth (trending toward high end)
    high materiality
    High
    Full-year profit
    $9.85 billion to $10.25 billion (trending toward high end)
    high materiality
    High
    Full-year EPS
    $7.20 to $7.40 (trending toward high end)
    high materiality
    High
    Full-year free cash flow
    $8 billion to $8.4 billion (trending toward high end)
    high materiality
    High
    Full-year CES segment guidance
    trending towards the higher end
    medium materiality
    High
    Full-year DPT segment guidance
    trending towards the higher end
    medium materiality
    High
    Q2 services growth
    high teens
    medium materiality
    High
    Full-year services revenue growth
    up roughly $4 billion year-over-year
    high materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Commercial Engines & Services (CES)
    Profit was up nearly $450 million, driven by higher services volume and price, and the absence of charges related to estimated profitability on long-term service agreements taken in Q1 FY25. Margins decreased due to installed engine growth, including 9X shipments, and investments.
    Orders: up 93%Services orders: up 49%Equipment orders: more than tripling to nearly $8 billionServices revenue: grew 39%Internal shop visit revenue: up 35%LEAP internal shop visit growth: >50%Spare part sales: up >25%Equipment revenue: grew 20%Engine deliveries: up 50%LEAP engine deliveries: up 63%Widebody deliveries: up >25%
    		up 34%——$2.4 billion profit, down 230 bps to 26.4%
    Defense & Propulsion Technologies (DPT)
    Orders included T408 engines for U.S. Marine Corps CH-53K. Defense & Systems unit growth was driven by F-110 and rotorcraft engines. Margins decreased due to mix, investments, and inflation. This was the second consecutive quarter with defense book-to-bill above 2%.
    Orders: increased 67%Defense & Systems revenue: up 14%Units grew: 24%Propulsion and Additive Technologies revenue: grew 29%Defense book-to-bill: above 2%
    		grew 19%——grew 17% profit, down 20 bps to 11.8%

    Operational metrics

    24
    Total orders growth
    87
    Q1 FY26

    Company-wide orders.

    EPS growth
    25
    Q1 FY26

    EPS of $1.86.

    Corporate costs and eliminations increase
    $120M
    Q1 FY26

    Roughly half from eliminations and half from environmental, health and safety expenses.

    Tax rate
    14.7decreased 3 points
    Q1 FY26

    From earnings mix and benefit from recent tax legislation.

    Share count reduction
    24M
    Q1 FY26

    From previously announced capital allocation actions.

    LEAP internal shop visit growth
    >50
    Q1 FY26

    Contributed to internal shop visit revenue growth.

    Spare part sales growth
    >25
    Q1 FY26

    From improved material availability and growth of external LEAP shop visits.

    Spare parts delinquency increase
    70
    since end of '24

    Represents shipments delayed due to material availability constraints.

    Spare parts revenue in backlog
    >95
    Q2 FY26

    Entering Q2 with revenue already in backlog.

    LEAP aftermarket margins
    improving
    FY26

    Expected to improve further this year, aiming to approach overall CES service margins by 2028.

    LEAP repairs developed
    doubleover last year
    FY26

    Helping reduce cost of shop visits.

    LEAP shop visits by third parties
    ~15up from ~10% 18-20 months ago
    Q1 FY26

    External channel coming up nicely.

    CFM56 retirement rates
    sub-1lower than Q4
    Q1 FY26

    Assumed 2% for FY26, 3-4% for FY27 in prior outlook.

    GE9X cost reduction target
    50
    future

    Driving towards this reduction.

    GE9X losses peak
    by 2028
    future

    Expected to peak by 2028.

    Commercial engine wins
    >650 engines or >$1B
    Q1 FY26

    Total wins in the quarter.

    LEAP durability upgrades on installed base
    >30
    Q1 FY26

    Percentage of LEAP 1A installed base with durability upgrades.

    LEAP high-pressure turbine repair time reduction
    >50
    Q1 FY26

    Achieved by redesigning the cell for better flow.

    Key supplier output increase
    >40
    Q1 FY26

    Achieved leveraging Flight Deck with a key supplier.

    Annual R&D
    nearly $3B
    annual

    Enables continuous improvement in time on wing and cost of ownership.

    Installed fleet size
    80,000
    Q1 FY26

    And growing, with more than 2.3 billion flight hours.

    Installed fleet flight hours
    >2.3B
    Q1 FY26

    Total flight hours for the installed fleet.

    Global departures growth
    low single digits
    Q1 FY26

    Company-wide global departures.

    Middle East departures decline
    high single-digit
    Q1 FY26

    Represents roughly 5% of total departures.

    Industry KPIs

    7
    MetricValueDetails
    Book to bill ratioabove 2%
    Total company backlog$210BUSD
    Defense program awards$1.4BUSD
    Program segment backlog$170BUSD
    Aftermarket services split39%
    Unit deliveries by program43%
    Production capacity expansion$1BUSD

    Orderbook & backlog

    2
    Commercial Services backlog$170BQ1 FY26

    up nearly $30M since end of '24

    Provides visibility into multiyear demand and supports continued growth.

    Total company backlog$210BQ1 FY26

    Provides resilience through changes in air traffic.

    Product announcements

    6
    ProductTypeDetails
    Delta TechOpsexpansion
    Iberiaexpansion
    Open fan technology testbed (RISE program)milestone
    GEK 1500 enginemilestone
    GEK 800 enginemilestone
    Hybrid electric turbo generator engine systemmilestone

    Deals & partnerships

    8
    American AirlinesEngine supply for A321neo and A321 XLR deliveries

    Committed to more than 300 LEAP-1A engines with options for 200 more.

    United AirlinesEngine supply for 787 fleet

    Selected 300 GEnx engines for its 787 fleet, making it the largest GEnx operator globally.

    DeltaEngine supply for new 787 fleet

    Committed to 60 GEnx engines with options for 60 more, marking its first GEnx selection.

    RyanairMaterial support and MRO services for CFM56 and LEAP engines

    Agreement covering approximately 2,000 CFM56 and LEAP engines to scale Ryanair's in-house capabilities, consistent with GE's open MRO strategy.

    U.S. Marine CorpsContract for additional T408 turboshaft engines$1.4B

    Contract for additional T408 turboshaft engines in support of the CH-53K.

    KratosInitial design concept of the GEK 1500 engine

    Partnership to complete an initial design concept of the GEK 1500, with potential applications across unmanned aerial systems, collaborative combat aircraft, and missiles.

    Shield AIPropulsion development for expat vehicle program

    Partnership for the expat vehicle program, pairing GE's propulsion development, testing, and certification expertise with Shield AI's autonomous aircraft capabilities.

    Beta TechnologiesHybrid electric turbo generator engine system for MV250 VTOL

    Completed a preliminary design review on the hybrid electric turbo generator engine system for Beta Technologies' MV250 VTOL autonomous aircraft.

    Capital programs

    4
    Investment in U.S. manufacturing sites and supply baseunderway$1B

    Benefit: accelerate engine deliveries, ramp part production, extend time on wing, strengthen defense industrial base

    Planned for the second consecutive year.

    Investment in external supplier baseunderway$100M

    Benefit: provide equipment and tooling to increase capacity

    Part of the $1 billion investment in U.S. manufacturing.

    Investment in LEAP durability upgradesunderwayNearly $200M

    Benefit: expanding capacity for LEAP durability upgrades

    Part of the $1 billion investment in U.S. manufacturing.

    Investment in Singapore repair facilityunderway$300M

    Benefit: support new technologies and repair processes

    Aimed at improving turnaround times and lowering cost of ownership.

    Risks & headwinds

    6
    Geopolitical conflict in the Middle EastFY26, with effects continuing through summer

    Full year departures outlook reduced from mid-single-digit growth to flat to low single-digit growth; low double-digit decline in Middle East departures for the year.

    Mitigation: Robust backlog providing resilience; services impact expected to lag changes in air traffic demand; increased scrutiny on discretionary spending.

    Elevated fuel prices and jet fuel spreadThrough Q3 FY26

    Brent prices remain elevated above current levels through Q3, decreasing to current levels by year-end.

    Mitigation: Contemplating a range of possibilities; assuming a return to more normal conditions by end of summer; historical lag and spring-back in aftermarket demand.

    Global GDP growth reductionNear-term

    Impacting air travel demand.

    Mitigation: Not contemplating a global recession; considerable backlog provides resilience; supporting customers to weather storms.

    Spare parts delinquencyOngoing

    Up roughly 70% since the end of '24.

    Mitigation: Continued momentum with suppliers and internal operations; goal to achieve zero delinquency through on-time delivery; leveraging Flight Deck.

    GE9X Mid Seal durability issueQ1 FY26 (identified in January)

    Durability issue identified on a flight test engine.

    Mitigation: Believed to be at root cause; finalizing modification; fully transparent with Boeing and FAA; no change to schedule or losses; 777X flight test program continues.

    Deceleration in spare parts growth, lighter work scopes, delayed spare engine shipments, and reduced billingsSecond half of FY26

    Potential impact included in full-year guidance.

    Mitigation: Taking a more measured view given the evolving environment; balancing various factors to deliver high end of guidance.

    What to watch in Q2 FY26

    5

    Global departures outlook

    H2 FY26
    CurrentReduced to flat to low single-digit growth for FY26
    TargetStabilization or improvement in global departures

    Why it matters

    The revised outlook directly impacts services revenue and overall demand, with a lag effect expected.

    As a result, we're reducing our full year departures outlook from mid-single-digit growth to flat, to low single-digit growth. This includes a low double-digit decline in the Middle East for the year.

    Q&A highlights

    5

    Will the lower departures outlook impact services growth in 2026 or 2027, and are you seeing increased CFM56/GE90 retirements?

    Management expects a strong Q2 with good visibility, maintaining the full-year guide due to backlog. Any services impact from sustained softness in departures would likely lag into 2027. No increase in parked aircraft or retirements has been observed, with Q1 CFM56 retirements being sub-1%.

    “I think what we're acknowledging it's very hard for any of us to call the duration of what's happening in the Middle East at this point. By holding the guide, I think what we've suggested is that the backlog that we have, the visibility that we do have for the second half should allow us to be within that guide that we offered up 90 days ago.”

    asked by David Strauss · answered by H. Culp

    2 min read5 chapters

    Detailed Narrative

    01

    Impact of Geopolitical Environment and Departures Outlook

    GE Aerospace revised its full-year global departures outlook from mid-single-digit growth to flat to low single-digit growth, primarily due to the Middle East conflict, which is expected to cause a low double-digit decline in Middle East departures for the year. Management noted that the impact on services revenue typically lags changes in air traffic demand by several quarters, but the company's robust backlog provides resilience. Despite the macro uncertainty🌐, the company maintained its full-year guidance, trending towards the high end, citing strong Q1 performance and visibility into Q2.

    02

    Operational Excellence and Flight Deck Initiatives

    The company highlighted the effectiveness of its 'Flight Deck' operating system in driving operational improvements. Examples include increasing a key supplier's output by over 40%, reducing LEAP high-pressure turbine repair time by over 50% at its McAllen site, and expanding the deployment of an AI-based material assistant at Lafayette to predict shop visit work scopes 9 months in advance. These efforts contributed to improved shop visit turnaround times for both narrow-body and wide-body platforms year-over-year.

    03

    Strategic Investments for Capacity and Durability

    GE Aerospace announced plans to invest $1 billion in its U.S. manufacturing sites and supply base for the second consecutive year, with $100 million specifically allocated to external suppliers to increase capacity. Nearly $200 million of this investment supports expanding capacity for LEAP durability upgrades. Additionally, the company is investing $300 million in its Singapore repair facility to support new technologies and repair processes, aiming to improve turnaround times and lower cost of ownership.

    04

    Robust Backlog and Key Customer Wins

    The Commercial Services business is supported by a robust backlog of over $170 billion, up nearly $30 million since the end of FY24, providing multiyear demand visibility. Key commercial engine wins in Q1 FY26 included American Airlines committing to over 300 LEAP-1A engines, United Airlines selecting 300 GEnx engines, and Delta committing to 60 GEnx engines. In defense, the company was awarded a $1.4 billion contract for additional T408 turboshaft engines for the U.S. Marine Corps CH-53K.

    05

    Advancing Next-Generation Technologies

    The company is making progress on its RISE program, establishing the world's first airport testbed for Open fan technology in Singapore with the Civil Aviation Authority of Singapore and Airbus. In Defense & Systems, an award from the U.S. Air Force will support the initial design concept of the GEK 1500 engine, building on the successful altitude testing of the GEK 800. Partnerships with Shield AI for the expat vehicle program and Beta Technologies for a hybrid electric turbo generator engine system also underscore advancements in autonomous and sustainable aviation.

    AI-generated summary of the company’s earnings call. Not investment advice.