GE Aerospace (GE) Q3 2026 earnings review
GE Aerospace orders rise 49%, but cash flow falls 14%
Airlines placed record engine orders with GE Aerospace, but the engine maker collected less cash than a year ago. Orders rose 49%, and chairman and chief executive H. Lawrence Culp, Jr. lifted every line of the full-year plan for a second time. Free cash flow fell 14% because unpaid customer bills grew, so by our math the plan needs fourth-quarter cash a third above last year's.
| Revenue, excluding run-off insurance | $13.3B +18% from a year ago |
|---|---|
| Profit per share, excluding one-offs | $2.25 +36% from a year ago |
| Free cash flow | $2.0B −14% from a year ago |
| Full-year operating profit outlook | Raised to $10.9–11.0B middle of the range: +21% on 2025 |
⚖️ Verdict: 🟢 Bullish
The story got better because the plan keeps proving cautious: the quarter came in above what the July outlook implied, and the outlook rose again. The bad news: the margin gain came from head-office costs, not the engine businesses, and the cash the plan needs has not arrived yet.
The question now is whether those unpaid bills are timing or the first sign of airlines paying more slowly. If timing, fourth-quarter cash lands near the $2.5 billion the plan implies; if not, the cash outlook misses even as profit beats. The cash flow statement on January 21 will tell.
🐂 Bull Case
Orders Rose 49% as Airlines Lined Up Engines
GE Aerospace earns most of its profit by servicing the jet engines it sells, for decades after delivery, so its order book shows the future work. Chairman and chief executive H. Lawrence Culp, Jr. expects "2027 commercial services to grow low-double-digits" on a services backlog above $170 billion.
At the Farnborough air show the engine maker took commitments for more than 1,800 engines. That included "the largest LEAP agreement ever", with IndiGo, for over 1,000 LEAP-1A engines. In October Turkish Airlines added over 300 LEAP-1B engines plus a services deal covering its whole fleet. In defense, GE Aerospace signed a contract worth up to $2.9 billion to support F414 engines on US Navy fighters.
- Total orders: $19.0 billion, up 49% from a year ago
- Commercial equipment orders: more than tripled, to $5.3 billion
- Defense orders: up 18%, though they only matched revenue in the quarter after running 1.5 times revenue over nine months
This matters because orders are arriving faster than engines leave the factory. Engine deliveries rose 8% while equipment orders more than tripled, so the backlog keeps lengthening. Every delivered engine then brings decades of spare parts and shop visits, which is where the high margins sit.
What to watch: the total backlog figure in the quarterly filing, which the release did not give. It stood at over $210 billion in June, and a higher number would confirm that these orders added future work rather than replacing cancelled contracts.
GE Aerospace Raised Its Outlook a Second Time
Three months ago GE Aerospace lifted every line of its full-year plan, and this quarter it did so again. By our math the July plan was cautious, because the quarter came in well above what it implied for revenue and profit, while cash came in below.
- Revenue: $13.3 billion, about 6% above what the July outlook implied for the quarter, by our math
- Operating profit: $3.0 billion, about 10% above what it implied
- Profit per share, excluding one-offs: full-year range now $8.00–8.10, from $7.65–7.85
- Operating profit: full-year range now $10.9–11.0 billion, from $10.55–10.75 billion
The record matters here. The engine maker finished 2025 above the top of its final profit, cash and earnings ranges, and each move this year is smaller than the last: the profit range gained $600 million in July and $300 million now. A result above a cautious plan says the plan was cautious. It does not say that demand risks have gone, because the plan was set knowing the order book.
What to watch: fourth-quarter operating profit against the $2.7 billion the new range implies, by our math. If last year's pattern holds, the year ends above $11.0 billion, and the question becomes how much caution sits in the first 2027 plan in January.
Suppliers Shipped More Parts and Shops Fixed More Engines
GE Aerospace cannot repair more engines or sell more spare parts than its suppliers let it, so parts arriving from priority suppliers set services growth. Chairman and chief executive H. Lawrence Culp, Jr. reported double-digit growth in that input from a year ago and "another quarter of record internal shop visit output".
Commercial services revenue grew 17%, above the pace the full-year plan needs for the second half, by our math. Internal shop visit revenue rose 12%, with LEAP engine visits up over 40% and heavier work on each engine. Using its lean operating model, FLIGHT DECK, the group cut LEAP turnaround by about two weeks and took "grounded aircraft from engines to nearly zero".
What to watch: the change in spare parts delinquency, the orders the company could not ship on time, which it quantified on recent calls but not in this release. A first fall there would show supply catching up with demand, with the LEAP-1B durability kit cutover still due in early 2027.
🐻 Bear Case
Cash Fell 14% Because Customers Paid Later
Free cash flow is the cash left after GE Aerospace pays its bills and buys equipment. It is the one headline figure that fell this quarter while profit rose, so far less of each dollar of profit turned into cash than a year ago.
- Free cash flow: $2.0 billion, down 14% from a year ago
- Share of profit that turned into cash: 87%, against 134% a year ago
- Customer receivables: a $1.7 billion cash outflow, almost fifteen times last year's
- Year to date: free cash flow up 13%, with 105% of profit turned into cash
The gap is almost entirely unpaid customer bills, and the release gives no reason for it. The company still lifted its full-year cash range to $9.1–9.4 billion. By our math that leaves about $2.5 billion for the fourth quarter, more than two fifths above last year's fourth quarter. So the plan assumes customers pay those bills by December.
What to watch: the receivables line in the fourth-quarter cash flow statement on January 21. If this quarter's build does not reverse, airlines are paying more slowly, and that would cut the cash outlook even if profit keeps beating the plan.
Margin Gain Came From Head Office, Not Engines
The release leads with operating profit up 30% and a margin, excluding one-offs, of 22.5%. That margin is 2.2 percentage points above a year ago, but the engine businesses contributed almost none of the gain. Commercial Engines & Services, the jet engine and servicing unit, held its margin near 28%, and the defense unit gained 0.2 points.
- Segment profit as a share of revenue: 25.3%, up 0.3 points from a year ago
- Corporate costs and eliminations: 2.8% of revenue, against 4.6% a year ago, a 1.8 point gain
- Corporate line in the profit-per-share bridge: 12 cents of the 55 cents that operating profit added
So the margin step came from head-office costs, which fell to $217 million from $381 million, and the release does not say why. GE Aerospace still expects full-year corporate cost of about $500 million, roughly flat on last year. By our math that leaves only about $40 million for the fourth quarter, so this quarter's saving looks like timing rather than a lower cost base.
What to watch: the Commercial Engines & Services margin in the fourth quarter, when the full-year range implies about 26% by our math. A reading there would confirm that engine mix, not head-office costs, decides where the group margin goes.
GE9X Losses Are Delayed, Not Gone
The GE9X is the engine for Boeing's new 777X, and GE Aerospace loses money on each early unit. It is one reason the servicing unit's margin has not risen while services revenue climbs. This quarter the group shipped GE9X engines but booked no effect: "the impact from these shipments will be recognized post midseal certification".
That deferral is part of why the unit's profit range rose, "driven by higher services growth and reduced GE9X impact", the company said. But a loss booked later is still a loss, and the midseal is the part that cracked on a test engine earlier this year. Meanwhile new engines, which earn less than services, keep growing faster: equipment revenue rose 38%, and "Margins contracted (10) basis points from mix and inflation".
What to watch: the date of midseal certification and the GE9X loss GE Aerospace books in the quarter after it. A loss landing in 2027 would push the servicing unit's margin recovery further out.
Risks This Quarter Didn't Answer
The quarter's demand numbers argue against an airline slowdown, but five standing concerns received no new figures in the release or the slides, and the demand question itself cannot be read until comparisons get harder next year.
- Airline demand: management has said a change in flying reaches shop visits two to four quarters later, so the first clean test is 2027, when growth laps this year's pace.
- Ryanair Flight 1879: in July GE Aerospace said CFM International, its engine venture with Safran, was assisting the investigation; these materials add nothing.
- Spare parts delinquency: the parts the company could not ship on time rose again last quarter; this release does not quantify it.
- Time on wing: airline complaints about the cost of owning new-generation engines got no update; the LEAP-1B durability fix is still set for early 2027.
- Total backlog: the release cites only the $170 billion services figure; the full number, $210 billion in June, waits for the quarterly filing.
👓 Other Themes
GE Aerospace Will Buy a Castings Supplier
GE Aerospace agreed to acquire Consolidated Precision Products, which makes metal castings for engines, "to expand mission-critical castings capacity for the aerospace industry". It disclosed no price. Borrowings stay at $19.3 billion with no repayment planned, and the group intends to "issue new debt in '27 to partially fund CPP acquisition", so the deal adds debt rather than using cash.
💲 Other KPIs
Down 24 million from a year ago, or 2.3%, after $2.0 billion of buybacks in the quarter. By our math repurchases total $6.2 billion so far this year. GE Aerospace expects about 1,050 million shares for the full year against 1,068 million in 2025, so the pace of reduction is slowing slightly as the year ends.
Cash of $10.3 billion, including short-term investments, sits against borrowings of $19.3 billion, so net debt is $9.0 billion by our math. Both barely moved since June. The group plans no repayment this year, will refinance maturities, and expects to add debt in 2027 to help pay for the castings purchase.
Up 0.2 points from a year ago but below the 16.7% of last quarter. GE Aerospace now expects about 16.0% for the full year, lowered from its earlier ceiling of 16.5%. The rate was 17.3% in 2025, so the lower rate adds to profit per share growth this year without any help from the engine businesses.
🔮 Guidance
Raised. Sales excluding the insurance business GE Aerospace is winding down should grow about 19–20% this year, up from high teens. By our math that leaves roughly 10% growth for the fourth quarter, against 18% this quarter, partly because last year's fourth quarter was the largest of 2025. It is the second raise after a hold in April, and a far smaller one than July's.
Raised. Operating profit should reach $10.9–11.0 billion, about 21% above 2025. The plan still has growth slowing at year end. By our math the fourth quarter needs about $2.7 billion, up 18% from a year ago. The implied margin is near 21%, the year's lowest, as in 2025. The middle of the range gained $600 million in July and $300 million now, and 2025 finished above the top of its final range.
Raised. Profit per share should land at $8.00–8.10, about 26% above 2025. By our math that leaves about $1.92 for the fourth quarter, up 22% from a year ago. Growth was 36% this quarter, so the plan has it slowing. The middle of the range rose $0.30 after $0.50 in July, helped by a tax rate now expected near 16% and a smaller share count.
Raised. Free cash flow should reach $9.1–9.4 billion, about 20% above 2025, even after a quarter in which it fell. By our math that leaves about $2.5 billion for the fourth quarter, which is 43% above last year's fourth quarter. The raise is $200 million at the middle of the range after $850 million in July, and it depends on this quarter's unpaid customer bills turning into cash.
Unchanged. The company still expects free cash flow to exceed profit excluding one-offs for the year. The ratio was 87% this quarter and 105% year to date, so by our math the fourth quarter must run well above 100% for the full year to hold, as it did at 106% a year ago.
Unchanged range, now expected at its better end. Corporate cost should be about $500 million, roughly flat on last year, and eliminations about $700 million, up about $100 million. By our math that leaves only about $234 million of combined cost for the fourth quarter after $373 million this quarter, so head-office savings do not help the fourth quarter.
Raised. The jet engine and servicing unit should grow in the low 20s, up from about 20%, with services at the high end of the low 20s and equipment also in the low 20s. By our math that leaves about 9% growth for the fourth quarter against 21% this quarter, and commercial services slowing to about 14% from 17%, on the way to the low double digits planned for 2027.
Raised. The unit should earn $10.5–10.6 billion, "driven by higher services growth and reduced GE9X impact". By our math the middle of the range implies a full-year margin near 27%, in line with the year to date. The fourth-quarter margin would sit near 26%, below this quarter, because the year-end quarter carries more engine deliveries.
Unchanged. The defense and propulsion unit, which also houses Avio Aero and Unison, should still grow in the low double digits. By our math that leaves only about 4% growth for the fourth quarter after 7% this quarter and 13% year to date, because last year's fourth quarter was the unit's largest. Defense orders only matched revenue this quarter.
Unchanged. The unit has earned $1.3 billion year to date, so by our math the fourth quarter needs about $320 million, roughly level with a year ago. The implied full-year margin is near 12%, below the 13.7% of this quarter, as spending on next-generation engines continues.
New figure, consistent with July's wording. Chairman and chief executive H. Lawrence Culp, Jr. expects "2027 commercial services to grow low-double-digits" on a services backlog above $170 billion. That is roughly half this year's pace, because 2027 laps two years of growth above 20%. The quarter's 17% already sits closer to that rate than to the year's average.
Lowered. The expected rate is now about 16.0%, from a ceiling of 16.5%, against 17.3% in 2025. The year-to-date rate is 15.6%, so by our math the fourth quarter runs a little above the average. A lower rate lifts profit per share without any change in the engine businesses.
❓ Key Questions
Why did customer receivables absorb $1.7 billion this quarter?
Receivables took almost fifteen times last year's cash, and the release gives no cause. Whether it is contract timing, airline payment terms or slower collections decides if the raised cash outlook holds.
Has spare parts delinquency started to fall?
Late shipments to customers rose again last quarter despite record output. The release does not quantify them; a first decline would show supply catching up with demand and release working capital.
What is GE Aerospace paying for CPP, and when does it close?
The castings deal expands capacity and will be partly funded with new debt in 2027, but no price, timing or effect on buybacks was disclosed.
Will management refresh the 2028 targets?
The full-year cash range of $9.1–9.4 billion already exceeds the cash target set for 2028, so the long-term frame no longer tells investors much.
What is CFM's exposure in the Ryanair Flight 1879 investigation?
In July the company said its engine venture was assisting the investigation. Any finding on engine involvement could trigger inspections or retrofits across the CFM56 and LEAP fleets.