GE Aerospace makes jet engines. It sells those engines to airlines and militaries, then keeps earning money for decades afterward by servicing, repairing, and supplying spare parts for every engine it has ever put in the air. The company operates two businesses: Commercial Engines and Services, which was 73% of 2025 revenue, and Defense and Propulsion Technologies, which was 23%. Roughly 70% of total revenue comes from aftermarket services, meaning the real money is not in selling the engine once. It is in the parts and shop visits that follow every flight, every year, for the life of that engine. The diagram below traces where the money goes.
How GE Aerospace Makes Money
flowchart LR
A["Commercial & Military
Engine Fleet 80000"] --> B["Installed Base
Supports Aftermarket"]
B --> C["Services Revenue
30.2B, 70% total"]
A --> D["Equipment Sales
12.2B, 30% total"]
C --> E["Operating Cash Flow
8.5B"]
D --> E
E --> F["R&D Investment
2.989B annually"]
F --> G["Product Upgrades
Ceramic Composites RISE"]
G --> A
C --> H["MRO Capacity
Expansion"]
H --> B
Five years of financial data tell a story of a company that shrank dramatically, then rebuilt itself into something more focused and more profitable. In 2021, revenue was $53.4 billion and gross margin was roughly 19%. That large revenue number included healthcare and energy businesses that have since been spun off as GE HealthCare and GE Vernova. By 2022, after those separations began, revenue dropped to $26.2 billion. But here is the key detail: gross margin jumped to 27%. The company got smaller and more profitable at the same time.
Revenue ($B) vs. Gross Margin (%), 2021 to 2025
Revenue collapsed when GE Aerospace shed its healthcare and energy units. Since 2022, revenue has grown steadily while gross margin has climbed from roughly 27% to roughly 32%, showing the remaining business has become more efficient as it scales.
From 2022 onward, the trajectory is consistent. Revenue grew from $26.2 billion to $42.3 billion over three years. Gross margin improved every single year, reaching roughly 32% in 2025. Free cash flow went from $4.5 billion in 2022 to $8.5 billion in 2025. Net debt, which was $19.4 billion in 2021, fell to $5.3 billion in 2023 before ticking back up to $8.1 billion in 2025, partly because the company issued $2 billion in new debt and spent $7.4 billion repurchasing its own shares. The company also received two credit rating upgrades in early 2025, from Moody's and from S&P.
$190.6B
Total remaining performance obligation (unfilled orders for equipment and services) as of December 31, 2025
That backlog number matters because of how engine contracts work. An airline does not just buy an engine. It often signs a long-term service agreement, sometimes covering 10 to 25 years of maintenance. Of the $190.6 billion in remaining obligations, $163 billion is in services. That is future revenue already contracted, spread across decades. The LEAP engine, which is still in a significant production ramp, is expected to eventually overtake the older CFM56 as the industry's largest fleet. As those LEAP engines age and need their first major overhauls, the services revenue attached to them will grow.
What is a shop visit?
A shop visit is when an airline removes an engine from the aircraft and sends it to a maintenance facility for a deep inspection and overhaul. These events are expensive, can cost millions of dollars each, and happen on a schedule driven by how many hours or cycles the engine has flown. GE Aerospace earns revenue both by doing these overhauls in its own facilities and by selling the spare parts used in third-party shops.
Internal shop visit revenue grew 24% in 2025 compared to 2024, and 19% in 2024 compared to 2023. Engine deliveries rose too, with 2,386 commercial engines delivered in 2025, up from 1,911 in 2024. The LEAP engine alone accounted for 1,802 deliveries in 2025. Every new LEAP engine delivered today is a future shop visit, and a future spare parts order, years from now. The Commercial Engines and Services segment earned a profit margin of 26.6% in 2025, up from 23.7% in 2023.
2021
milestone
GE Announces Three-Way Split
In 2021, GE announced it would separate into three independent companies: one focused on aerospace, one on healthcare, and one on energy. GE HealthCare and GE Vernova have since become independent. What remains is GE Aerospace, a pure-play engine maker and servicer with roughly 80,000 engines in its installed base and a $190.6 billion order backlog. The split stripped away decades of conglomerate complexity and left a business whose entire cash flow now comes from making and maintaining the engines that keep commercial and military aircraft flying.
The risks facing this business are specific and documented. The most direct threat is a pullback in commercial air travel. If airlines cut spending because of an economic downturn, fuel price shock, or reduced passenger demand, they defer engine orders and push out shop visits. That hits both revenue lines at once. Second, supply chain constraints have already slowed deliveries for several years. GE Aerospace operates in what its own filings call a supply-constrained environment, relying on some single-source suppliers whose failure to deliver on time can delay engine output and reduce shop visit completions. Third, the company faces a specific financial risk tied to its past. If U.S. tax authorities determine that the GE HealthCare or GE Vernova spin-offs were taxable transactions rather than tax-free ones, the company could face significant unexpected tax bills.
$8.5B
Free cash flow in 2025, up from $2.2B in 2021, showing how much cash the focused aerospace business generates compared to the old conglomerate
There is also a product safety risk that is unique to this industry. If a GE Aerospace engine suffers a serious defect, regulators have the authority to ground entire fleets of aircraft. A grounding would not just stop new sales. It would halt the aftermarket services that produce most of the company's profit. Finally, the defense business, which was 23% of 2025 revenue, depends on government contracts that can be modified, cut, or cancelled. U.S. defense budgets and foreign military sales drive that segment, and neither is guaranteed.
Why selling engines cheaply can still be a good deal
Engine makers sometimes sell new engines at a low margin or even a loss to win a contract with an airline. The real profit comes later, from selling that airline spare parts and maintenance services for the next 20 or 30 years. Once an airline's fleet is built around one engine type, switching to a competitor's engine is extremely expensive. This creates a long, locked-in stream of aftermarket revenue for whoever made the original engine.
This dynamic also creates a vulnerability. GE Aerospace's long-term service agreements require the company to estimate, years in advance, what maintenance will cost. When those cost estimates turn out to be wrong, the company must take a catch-up charge. In 2025, the company noted unfavorable changes in estimated profitability on long-term service contracts, primarily because of the expected impact of tariffs. These kinds of estimate revisions are a normal feature of the business, but they can be large and they can be hard to predict.
GE Aerospace still carries legacy insurance obligations from a long-term care insurance business that the old GE conglomerate ran. The run-off insurance operation produced $3.5 billion in revenue and $992 million in profit in 2025, but it also carries long-term liabilities that are sensitive to how long policyholders live and how much care they need. This is a shrinking but not yet gone piece of financial exposure that sits alongside the core aerospace business.
The Bet
GE Aerospace's entire financial logic rests on the installed base of roughly 80,000 engines continuing to fly, age, and generate shop visits at growing rates for the next decade. The LEAP engine, still ramping in production, has to mature into the world's dominant narrowbody engine and then drive a wave of overhaul demand in the late 2020s and 2030s. If commercial air travel grows as expected, if the supply chain eventually catches up to demand, and if no major engine safety event grounds a key fleet, the services backlog of $163 billion converts into cash at improving margins. If any of those conditions breaks down, including a demand shock to air travel or a fleet grounding, the revenue engine that funds everything from share buybacks to next-generation engine development loses its foundation before the next generation of platforms is ready to carry its own weight.
Open question
GE Aerospace has a focused business, a growing backlog, improving margins, and a clear path to more shop visits as the LEAP fleet ages. The numbers from 2022 to 2025 show consistent improvement in every major measure. But the business is deeply tied to one activity: commercial air travel. And it is running a multi-decade bet that long-term service agreements, priced years in advance, will remain profitable even as tariffs, supply costs, and inflation change the actual cost of delivering those services. Can GE Aerospace keep expanding its margins and converting its $163 billion services backlog into cash at the pace its financial model requires, or will supply constraints, tariff pressures, and the inherent uncertainty of 25-year maintenance cost estimates erode the profitability of the very agreements that make the aftermarket model so attractive?
Compiled · 10-K · FY2025
Commercial Aviation Sector Cyclicality
A large portion of the company's business depends on airlines buying new engines and aftermarket services. If airlines reduce spending due to economic downturns, fuel prices, safety concerns, or reduced travel demand, the company's sales and profits could drop significantly.
Supply Chain Constraints and Material Shortages
The company relies on suppliers worldwide for parts and materials, including some single-source suppliers. Disruptions from wars, natural disasters, labor shortages, or trade restrictions could delay product deliveries, increase costs, and hurt profitability, especially as the company ramps up production of engines like the LEAP.
GE Spin-off Tax Liabilities
If the U.S. government determines that the GE HealthCare or GE Vernova spin-offs were taxable transactions instead of tax-free, the company could face significant tax bills and shareholders could owe taxes on the distributions they received.
Product Safety and Quality Failures
If a commercial or defense aircraft engine has a serious safety defect, design flaw, or manufacturing problem, it could cause fleet groundings, injuries, deaths, or regulatory shutdown. This would harm the company's reputation and financial results.
Government Contract Changes and Compliance
The company's defense business depends on U.S. government spending and contracts that can be modified or cancelled. New regulations, investigations, or violations could result in fines, suspension from bidding on future contracts, or loss of business.
10-K Item 1A · Risk Factors
