Revenue Surges 21%: GE Aerospace Hits $10B Profit Two Years Early (GE Q4 2025 Earnings Call)
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GE Aerospace closed 2025 by exceeding the high end of guidance on every key metric, with revenue up 21%, operating profit up 25%, and free cash flow surging 24% to $7.7 billion. The company is now guiding to reach its $10 billion operating profit target in 2026, two full years ahead of its original 2028 timeline, as the LEAP aftermarket scales and defense deliveries accelerate.
Full-Year Revenue Up 21% with EPS Surging 38% to $6.37
GE Aerospace delivered Q4 revenue growth of 20% with orders up 74%, capping a full year where orders grew 32% and revenue increased 21%. CES (Commercial Engines & Services) drove the results with services revenue up 26%, internal shop visit revenue up 24%, and spare parts revenue growing more than 25%. LEAP engine deliveries hit a record 1,800-plus units for the year, up 28%, while total commercial and defense deliveries increased 26%. EPS for 2025 reached $6.37, up 38% from operating profit growth, a lower tax rate, and reduced share count. Free cash flow hit $7.7 billion with conversion above 110%, driven by earnings growth and contract asset favorability.
2026 Guide: $10B Operating Profit, $8B+ Free Cash Flow, 15% EPS Growth
Management expects 2026 revenue to grow low double digits, with commercial services up mid-teens including LEAP internal shop visits growing 25%. Operating profit is guided at $9.85 billion to $10.25 billion, up roughly $1 billion at the midpoint. EPS is projected at $7.10 to $7.40, approximately 15% higher at midpoint, with about 85% of the improvement from operating profit and the remainder from a lower tax rate (below 17%) and an 18-million-share reduction. CEO Larry Culp stated, "We're well positioned to deliver for our customers and shareholders," emphasizing the $190 billion backlog that grew nearly $20 billion in 2025. Free cash flow is guided at $8.0 billion to $8.4 billion with conversion solidly above 100%.
LEAP Durability Kit Ships 1,500 Units as CFM56 Defies Retirement Expectations
The LEAP 1A durability kit, designed to improve time on wing by more than two times to match CFM56 levels, has now shipped nearly 1,500 units and is incorporated in all new engine deliveries and shop visits. LEAP turnaround times improved over 10% year-over-year in Q4 as priority supplier material input grew more than 40% for the full year. CFM56 retirements ended 2025 at approximately 1.6%, well below the previously expected 2% to 3% range, extending the fleet's revenue contribution. Management now expects CFM56 shop visits in the 2,300 to 2,400 range annually through 2028, better than prior estimates. The LEAP installed base is expected to roughly triple between 2024 and 2030, and GE is dedicating approximately $500 million of over $1 billion in MRO investment to LEAP capacity expansion.
Analysts Focus on CES Margin Trajectory as GE9X Losses Double in 2026
CES margins ended 2025 at 26.6%, 70 basis points above October guidance, but management expects roughly flat margins in 2026. The primary headwinds are GE9X OE losses doubling year-over-year as shipments ramp up, a declining spare engine ratio, and increased R&D investment. Culp addressed the long-term picture by noting that the $10 billion operating profit milestone, originally targeted for 2028, is now achievable in 2026. CFO Rahul Ghai added that LEAP OE will become profitable in 2026 per prior plans, and that CFM56's subdued retirement rate creates a more favorable shop visit profile than previously modeled. On the organizational front, T&O (Technology & Operations) is being integrated into CES under Mohammad Ali to improve end-to-end engine lifecycle management.