GE Aerospace's Free Cash Flow Just Doubled. The Earnings Call Is the Inflection.

GE Aerospace has existed as a standalone entity for less than two years, following the April 2024 spin of GE Vernova and the 2023 demerger of GE HealthCare. The pre-spin GE was a conglomerate that hid the aerospace franchise inside a capital structure anchored by legacy insurance liabilities and power-generation capex. The standalone entity has been, depending on the week, the best-performing aerospace franchise in public markets.

The 2025 numbers give the cleanest read of the business the market has ever seen. Revenue of $45.9 billion carries an operating margin of 19.1%, up from 17.5% in 2024. The installed engine base on commercial airframes is over 44,000 units. The next wave of CFM LEAP shop visits begins in mid-2026 and runs through 2032, producing a multi-year aftermarket tailwind that supports the current consensus earnings trajectory.

One news story worth flagging: the Woodward commentary in the April 17 flow noted that GE suppliers have 'clear skies ahead', a reference both to the aerospace production cycle and to specific Woodward content in the LEAP and F414 engine programs. That subsupplier commentary is the leading indicator for GE Aerospace's aftermarket print in Q3-Q4 2026.

Three things to watch on the 22 April earnings release. First, LEAP engine deliveries. The Boeing 737 MAX production ramp has been the bottleneck, and any commentary suggesting the delivery cadence is finally tracking to 42-per-month would be a positive for CFM joint venture throughput. Even small improvements here flow through to 2027 aftermarket revenue projections.

Second, shop visit mix. GE Aerospace aftermarket is entering the high-margin phase of the LEAP cycle. First-performance restoration shop visits carry different economics from heavy shop visits. The company has signalled that the mix will shift toward heavy visits by late 2026, which is when the aftermarket margin really steps up. Any Q1 commentary that pulls this timeline forward would be a meaningful positive.

Third, capital return. GE Aerospace guided a $15 billion buyback across 2025-2028 at the spin. They have executed roughly $3 billion so far. A Q1 update on the remaining pace (accelerated? maintained? slowed?) would signal management's view on valuation. At the current $314 billion market cap, an accelerated buyback would be accretive and would confirm that the board sees the stock as undervalued despite the 200-day moving average near $296.

Historically, when a newly spun-off aerospace franchise prints a clean FCF acceleration in its first full standalone year, the re-rating has been sharp. Boeing's post-McDonnell merger in 1998 is the less clean comparison; the better reference is Raytheon's post-1990s defence reorganisation, when the focused aerospace entity re-rated by 40% over 18 months.

The commercial engine market is structurally a three-player affair: GE, Pratt & Whitney, and Rolls-Royce. Within narrow-body aircraft (the highest volume segment), the CFM joint venture (GE plus Safran) powers essentially all Boeing 737 MAX aircraft and competes with Pratt & Whitney on the Airbus A320neo family. GE's market position is exceptionally strong here because CFM has won the majority of A320neo engine selections since 2022.

For wide-bodies, GE's GEnx engine powers the 787 Dreamliner and competes with Rolls-Royce Trent 7000 and Pratt PW1000G variants. The mix has been shifting toward GE on the 787 family, reinforcing the aftermarket economics.

Defence propulsion is a meaningful fourth leg. The F414 engine powers the F/A-18 Super Hornet and the KF-21, and the T901 engine was selected for the US Army's Future Attack Reconnaissance Aircraft and Black Hawk upgrade programs. The defence aftermarket piece is structurally under-appreciated in the valuation.

By comparison, the RTX Pratt & Whitney franchise has been dealing with the GTF contamination issue (covered in our other article today), and Rolls-Royce has its own shop-visit overhang on the Trent 1000. GE is the cleanest-executing of the three propulsion majors today.