GE Aerospace makes jet engines. It sells them to airlines and militaries, then earns most of its money for decades afterward by servicing those same engines under long-term contracts. Every time a plane takes off, the engine accumulates hours. Those hours eventually trigger a required shop visit, where GE Aerospace does the maintenance and collects the fee. The company runs two main segments: Commercial Engines and Services, which covers engines for passenger and cargo aircraft, and Defense and Propulsion Technologies, which covers military engines for planes like the F-15 and F-16. Services revenue in 2025 was $30.2 billion, more than double equipment revenue of $12.2 billion, which tells you where the real business lives. The diagram below traces where the money goes.
How GE Aerospace Makes Money
flowchart LR
A["Commercial Airlines
Aircraft Orders"] -->|engines & systems| B["Equipment Sales
12.2B"]
C["Defense Customers
Gov Contracts"] -->|engines & systems| B
B --> D["Installed Base
Thousands of Units"]
D -->|spare parts, repairs, maintenance| E["Services Revenue
30.2B"]
E --> F["Operating Cash Flow
8.5B"]
B --> F
F --> G["R&D & Operations
New Platforms LEAP, GE9X"]
G --> H["Product Innovation
Lower Emissions Tech"]
H --> A
H --> C
D --> G
2024
milestone
From Sprawling Conglomerate to Focused Aerospace Company
After years of financial trouble, GE completed a three-way split of its old self. GE HealthCare became independent in January 2023. GE Vernova, the energy business, separated in April 2024. What remained is GE Aerospace: a single-focus company built around engines and the services that keep them flying. Net debt dropped from $19.4 billion in 2021 to $5.3 billion in 2023, a direct result of shedding the conglomerate structure.
Five years of numbers tell a clear story about what the simplification did to the finances. In 2021, the old combined company reported $53.4 billion in revenue with a gross margin of only 18.7%. That 2021 revenue figure included businesses that were later spun off, so it is not a fair comparison to today. Once the splits were complete and GE Aerospace stood alone, revenue grew from $26.2 billion in 2022 to $42.3 billion in 2025. Gross margin climbed steadily every single year, from 27.5% in 2022 to 31.6% in 2025. Free cash flow went from $2.4 billion in 2021 to $7.3 billion in 2025. The direction of travel on every one of those metrics is the same: up.
Gross Margin Expansion (2021 to 2025)
Gross margin has improved every year as GE Aerospace shed lower-margin businesses and grew its higher-margin services mix. Source: XBRL financials.
The services business has an unusually long runway built into it already. GE Aerospace calls its unfilled orders its remaining performance obligation, or RPO. As of December 31, 2025, the services RPO alone stood at $163 billion. That number represents contracted future revenue the company has already won but not yet earned. Customers sign service agreements lasting 10 to 25 years, so that backlog does not evaporate quickly.
$190.6B
Total remaining performance obligation at December 31, 2025, including $163B in services contracts already signed
What Is a Long-Term Service Agreement?
When an airline buys a GE Aerospace engine, it often signs a separate deal lasting 10 to 25 years. Under that deal, GE Aerospace agrees to maintain the engine over its life. The airline pays per hour of engine use, or pays when a maintenance event happens. GE Aerospace then has to estimate costs years into the future to make sure it earns a profit on each contract.
The commercial side is growing fast. In 2025, GE Aerospace delivered 2,386 commercial engines, up from 1,911 in 2024. LEAP engines, which power newer narrowbody aircraft and are in a major production ramp, accounted for 1,802 of those deliveries. Internal shop visit revenue, which is the money earned when engines come in for maintenance, grew 24% in 2025. Commercial segment profit margin reached 26.6%. The defense segment is smaller but also growing, with revenue of $10.6 billion in 2025 and a profit margin of 12.3%, up from 10.1% in 2023.
23.7%
Commercial Segment Profit Margin 2023
26.6%
Commercial Segment Profit Margin 2025
Commercial margins have expanded nearly 3 percentage points in two years as services volume grew and pricing improved.
Now for the risks. None of them are trivial. The commercial aviation business is deeply cyclical. When recessions hit, airlines cut spending. When travel demand falls after events like pandemics or geopolitical disruptions, fewer flights means fewer engine hours, which means fewer required shop visits. GE Aerospace cannot control when those cycles turn. The company's own filings say the airline industry has historically been highly cyclical and that sustained economic growth is the principal factor underlying long-term air traffic growth.
The supply chain is also a live problem, not a theoretical one. GE Aerospace operates in what its own filings call a supply-constrained environment. Getting enough materials, skilled labor, and parts to ramp LEAP engine production is an ongoing challenge. Some suppliers are sole-source, meaning there is no backup if they fail to deliver. Tariffs add another layer of cost. The company acknowledged in its 2025 filing that tariffs created an unfavorable change in the estimated profitability of long-term service agreements.
$1B
Amount GE Aerospace is investing to expand its global maintenance, repair and overhaul network capacity, including $500 million specifically for LEAP engine capacity
The defense business carries its own specific risk. Most of its revenue flows through the U.S. Department of Defense budget. If the government shifts spending priorities, cuts the defense budget, or moves toward different types of weapons such as uncrewed aircraft systems, demand for traditional fighter jet engines could shrink. GE Aerospace also still carries legacy exposure from the old GE era: a run-off insurance business and a Polish mortgage portfolio that are winding down slowly and could require additional capital injections if assumptions about interest rates, health costs, or borrower defaults move against the company.
The two spinoffs, GE HealthCare and GE Vernova, were intended to be tax-free transactions. If the U.S. government ever determines they were taxable, GE Aerospace would face a significant tax bill. The company lists this as a high-severity risk in its filings.
Cybersecurity is a documented and ongoing threat, not a boilerplate warning. GE Aerospace's filings describe actual attacks already experienced, including phishing attacks that resulted in unauthorized access to systems and data. The company makes technology that goes into military aircraft, which makes it a high-value target for state-sponsored hackers looking to steal engine designs and manufacturing secrets.
The Bet
GE Aerospace's services machine keeps generating growing cash only if the global fleet of engines it already sold stays in the air and keeps accumulating hours. Every long-term service agreement in that $163 billion backlog was priced on assumptions about how much airlines will fly those engines, what maintenance will cost decades from now, and that tariffs, inflation, and supply disruptions can be managed or passed on through pricing. If air travel demand stalls, if cost estimates on those 10-to-25-year contracts prove too optimistic, or if supply chain pressures compress margins faster than pricing actions can offset them, the services engine that the whole financial story depends on earns less than the backlog implies.
Open question
GE Aerospace has a $190.6 billion order book, rising margins, and free cash flow that jumped from $2.4 billion in 2021 to $7.3 billion in 2025. The company is clearly more focused and more profitable than the conglomerate it used to be. But the LEAP engine ramp is still underway, supply chains are still constrained, tariff costs are showing up in contract profitability estimates, and the business is ultimately tied to how much the world flies. Can GE Aerospace keep expanding margins and delivering on its services backlog while simultaneously ramping engine production through a supply-constrained environment, or will the operational strain of doing both at once erode the financial progress the last three years of data show?
Compiled · 10-K · FY2025
Commercial Aviation Sector Cyclicality
A large part of the company's business depends on airlines buying and using aircraft engines. If airlines reduce spending due to economic downturns, fuel prices, safety concerns, or travel demand drops, the company's sales and profits could fall significantly. The company cannot predict when these economic conditions will change or how they will affect customer orders.
Supply Chain Disruptions and Inflation
The company relies on many suppliers worldwide to provide materials and parts. If suppliers cannot deliver on time, raise prices, or run short of materials due to war, natural disasters, or labor shortages, the company may not be able to make its products on schedule or at expected costs. This could hurt the company's ability to meet customer orders and reduce profits, especially for newer engines like LEAP.
Defense Spending and Government Policy Changes
The company's defense business depends heavily on U.S. federal government spending decisions, which can change based on politics, budget priorities, or national security strategy. If the government cuts defense spending or shifts to different types of military equipment, the company could lose significant contracts and revenue.
GE Spin-Off Tax Liability
The company spun off GE HealthCare and GE Vernova as separate companies in transactions intended to be tax-free. If the U.S. government determines these transactions should have been taxable, the company would owe a large tax bill and shareholders would face unexpected tax liabilities.
Cybersecurity and Data Theft
The company faces ongoing attacks from hackers and foreign governments trying to steal its technology secrets and product designs. If attackers succeed in stealing or leaking trade secrets, or if cyberattacks disrupt manufacturing or customer operations, it could damage the company's competitive position and reputation.
10-K Item 1A · Risk Factors
