Supply Chain Gains Drive Higher Profits and Optimism
GE Aerospace raised its full-year profit forecast on Thursday after CEO Larry Culp reported progress in resolving supply constraints that have plagued the aviation industry. Improved deliveries of jet engines, particularly LEAP models used in Airbus and Boeing narrowbody aircraft, helped drive a 45% increase in total engine shipments during the second quarter.
The company now expects adjusted annual earnings per share between $5.60 and $5.80, up from its previous range of $5.10 to $5.45. It also raised its 2028 operating profit forecast to about $11.5 billion, up from $10 billion. Shares rose about 1% following the announcement.
LEAP Engines Fuel Performance Despite Supply Challenges
GE delivered 38% more LEAP engines year over year, a critical component in its dominance of the narrowbody jet engine market. The company noted that more than 70% of its commercial engine revenue stems from parts and services, driven by the steady use of older jets due to ongoing production delays in newer aircraft.
Culp said suppliers shipped 10% more parts in the second quarter compared to the previous one, with fulfillment rates now exceeding 90% of committed volumes. However, he emphasized that challenges remain, stating, “You’re not going to hear me declare victory. We’re going to continue to push.”
Tariff Pressures Mount, Recovery Plan in Progress
GE Aerospace faces $500 million in tariff-related costs this year, a consequence of ongoing trade tensions under U.S. President Donald Trump’s administration. While the company is working to control expenses and adjust pricing, Culp said airlines have been hesitant to absorb these additional costs.
To ease the burden, GE is seeking customer cooperation and urging the White House to reinstate tariff-free provisions under the 1979 Civil Aircraft Agreement. Culp pointed to the recent UK-U.S. trade deal eliminating aerospace tariffs as a model worth following, highlighting the sector’s $75 billion annual trade surplus.
Strong Q2 Results Bolster Investor Confidence
GE Aerospace reported adjusted second-quarter earnings of $1.66 per share, surpassing analyst expectations of $1.43, according to LSEG data. The company’s momentum comes at a crucial time, as the aviation sector recovers from pandemic-era disruptions and gears up to meet growing global demand.
With global aircraft departures expected to rise modestly this year, GE’s services business remains a key revenue driver. Culp reiterated the company’s focus on navigating economic uncertainty while maintaining operational efficiency to meet escalating customer needs.
