Detailed Narrative
Operational Improvements and FLIGHT DECK Initiative
The FLIGHT DECK initiative continues to drive significant operational improvements across the company. Examples include reducing F110 engine production lead time by 60% for a critical component in Lynn, Massachusetts, and cutting 56 final assembly lead time by nearly 50% at the Selma MRO site. These efforts have improved total shop visit turnaround times by about a week since the end of 2025. AI is also being leveraged as a force multiplier, automating demand signal processes and reducing processing time by nearly 90% across 190 parts, leading to double-digit sequential and year-over-year increases in supplier material input.
Aftermarket Demand and LEAP Engine Performance
Aftermarket demand remains resilient, with commercial services backlog at approximately $170 billion. Demand for LEAP engines is robust, as evidenced by Copa Airlines selecting up to 120 LEAP-1B engines. The company achieved a major milestone with the certification of the LEAP-1B durability kit, expected to deliver a twofold improvement in time on wing, with full MRO and new make cutover anticipated early next year. LEAP turnaround times have improved to around 100 days, down over two weeks year-over-year, and grounded LEAP-powered aircraft due to engines are nearly zero.
Defense Segment Advancements
The Defense & Propulsion Technologies (DPT) segment continues to support robust demand and advance next-gen technologies. Key developments include an agreement with Turkish Aerospace Industries for F404 engines for the HURJET program and CP7 engine selection for the U.K. Ministry of Defense's new medium helicopter program. The XA-102 adaptive cycle engine program completed an assembly readiness review, moving from design to assembly and test. The GEK 1500 and GE426 engines for collaborative combat aircraft (CCA) achieved preliminary design review milestones.
Hybrid Electric Flight and Future Technologies
GE Aerospace is advancing the future of flight through investments in hybrid electric technology. The company recently completed a ground test for the megawatt class hybrid electric demonstrator as part of the NASA EPFD project, a major milestone in understanding hybrid electric flight. An expanded relationship with Beta Technologies will further advance the modification of the EPFD aircraft, with plans for a flying display at the Farnborough Air Show. Hybrid electric technology is seen as a critical pillar for both commercial and defense applications.
Supply Chain and Capacity Management
Significant progress has been made on the supply chain side, with nine consecutive quarters of double-digit increases from critical suppliers. The company is engaged in deep technical collaboration and joint problem-solving with partners like GKN to break constraints, increase capacity, and bust bottlenecks. Despite these efforts, spare parts delinquency remains a challenge, growing 20% sequentially, indicating that supply side constraints continue to be a governor on growth, particularly for services.
Margin Trajectory and Headwinds
The company's margin trajectory is influenced by three main factors: strong installed engine growth, the gradual improvement of LEAP services margins (expected to align with total services by 2028), and initial losses from GE9X units (expected to peak by 2028). Despite these headwinds, overall company margins remained largely flat due to the high-margin services portfolio. Management anticipates margin expansion for both CES and the total company from 2028 onwards as these headwinds abate.