GE Q4 Deep Dive: Aftermarket Strength and Supply Chain Actions Shape 2026 Outlook

Industrial conglomerate GE Aerospace (NYSE:GE) announced better-than-expected revenue in Q4 CY2025, with sales up 17.6% year on year to $12.72 billion. Its non-GAAP profit of $1.57 per share was 9.5% above analysts’ consensus estimates.

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StockStory’s Take

GE Aerospace ended Q4 with results above Wall Street’s expectations, but the market reacted negatively as investors weighed operational execution against future risks. Management attributed the strong revenue growth to robust commercial services demand and improved output from both its commercial and defense segments. CEO Larry Culp emphasized the company’s “substantial improvement across all key metrics,” driven by higher shop visit volumes, expanded aftermarket services, and productivity gains from operational streamlining. CFO Rahul Ghai highlighted that increased material availability and better execution on the shop floor led to improved turnaround times, particularly for LEAP and CFM56 engines.

Looking ahead, GE Aerospace’s guidance reflects confidence in sustained demand for its commercial aftermarket and ongoing investments in technology and manufacturing capacity. Management expects mid-teens revenue growth in services, underpinned by a growing installed base and new product enhancements, such as the LEAP 1A durability kit. CEO Larry Culp stated, “As we further embed flight deck, we’ll unlock greater value for our customers and shareholders,” while CFO Rahul Ghai pointed to continued improvements in shop visit productivity and expanding third-party maintenance partnerships as sources of future margin stability, despite headwinds from equipment mix and R&D investments.

Key Insights from Management’s Remarks

Management cited commercial services momentum, lower engine retirements, and productivity initiatives as primary drivers of the quarter’s above-consensus results.

• Commercial aftermarket momentum: The quarter saw significant growth in shop visit volume and spare parts sales, driven by strong demand for LEAP and CFM56 engine maintenance. Management noted that internal shop visit revenue grew 24%, with LEAP shop visits up 27%, and spare parts sales increased more than 25%.
• Supply chain productivity gains: GE Aerospace improved turnaround times across its maintenance network by over 10% year over year, thanks to enhanced supplier partnerships and process improvements. The Wales facility achieved a 20% improvement in turnaround for CFM56 engines, while Selma maintained sub-80-day turnaround times.
• LEAP program scaling: The company delivered a record number of LEAP engines, exceeding 1,800 units, and expanded its maintenance, repair, and overhaul (MRO) footprint by adding new partners and facilities, such as MTU Dallas and a Dubai on-wing support center. Investments totaling $500 million are being allocated to double LEAP’s internal MRO capacity.
• Lower CFM56 engine retirements: CFM56 retirements remained below initial expectations, supporting continued demand for aftermarket services. Management expects CFM56 shop visits to remain stable through 2028, reflecting the engine’s extended lifecycle in active fleets.
• Organizational realignment: Structural changes included integrating technology and operations functions into the commercial engine segment and leadership transitions, with Mohammad Ali leading the new combined team and the retirement of Russell Stokes after 29 years. These moves aim to improve cross-functional alignment and customer responsiveness.

Drivers of Future Performance

Management anticipates growth in commercial services and improved supply chain execution will underpin revenue and earnings, while equipment mix and R&D investments present margin headwinds.

• Aftermarket services expansion: GE Aerospace projects mid-teens growth in commercial services revenue, anchored by a rising installed base, higher shop visit volumes, and ongoing durability improvements, particularly for LEAP engines. Management expects continued growth in third-party maintenance partnerships to support this expansion.
• Supply chain and productivity initiatives: The company is targeting further reductions in turnaround times and increased output by investing over $1 billion in its global MRO network and increasing material availability from priority suppliers. These steps are expected to drive operational efficiency and support higher aftermarket volumes.
• Margin pressures from equipment mix and R&D: While services remain a key profit driver, management flagged that higher original equipment (OE) shipments, a lower spare engine ratio, and increased R&D spending—especially for next-generation propulsion technologies—will offset some of the service margin gains in 2026. The GE9X program is expected to double its losses year over year, impacting profit growth.

Catalysts in Upcoming Quarters

In upcoming quarters, the StockStory team will be monitoring (1) execution on aftermarket shop visit growth and spare parts availability, (2) progress in reducing maintenance turnaround times and scaling LEAP MRO capacity, and (3) the impact of increased GE9X and OE shipments on overall segment margins. Developments in R&D investment allocation and customer adoption of new durability kits will also be key areas of focus.

GE Aerospace currently trades at $297.15, down from $318.50 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).

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