How Does GE Aerospace Make its Money?
GE Aerospace (formerly General Electric) is one of the world’s largest jet engine manufacturers and aerospace systems providers. Following the April 2024 spinoff of GE Vernova (the energy business), GE is now a pure-play aerospace company focused on designing, manufacturing, and servicing jet engines for commercial airlines and military customers.
GE Aerospace’s engines power a significant portion of the world’s commercial aircraft fleet. The company operates the classic “razor-and-blade” business model: it sells jet engines at low margins (or even at a loss) to win positions on new aircraft, then generates decades of high-margin revenue from aftermarket services — spare parts, maintenance, repairs, and overhauls — for the life of each engine (typically 25-30+ years).
Revenue Breakdown
| Segment | 2024 | 2023 | YoY Growth |
|---|---|---|---|
| Commercial Engines & Services | $27.8B | $23.1B | +20.3% |
| Defense & Propulsion Technologies | $9.2B | $8.5B | +8.2% |
| Total Revenue | $38.4B | $32.9B | +16.7% |
Commercial Engines & Services — 72% of Revenue
The core business and GE Aerospace’s profit engine. Revenue comes from two distinct streams:
- Original Equipment (OE) — New engine sales for commercial aircraft. GE and its joint venture CFM International (a 50/50 partnership with France’s Safran) produce the LEAP engine (for Boeing 737 MAX and Airbus A320neo), the GE90/GEnx (for Boeing 777/787), and are developing the next-generation CFM RISE engine. LEAP is the world’s best-selling jet engine.
- Services — Aftermarket spare parts, engine overhauls, long-term service agreements, and maintenance. Services represent the majority of profit in this segment. As the global aircraft fleet ages and flight hours increase, demand for engine services grows predictably.
Commercial services revenue grew over 20% driven by increased flight departures globally, a growing installed engine base, and favorable pricing. The mix is shifting toward more services as airlines increase utilization of existing aircraft.
Defense & Propulsion Technologies — 24% of Revenue
Military jet engines (F110 for F-16, F414 for F/A-18, T700 for Black Hawk helicopters), marine engines, and other defense systems. This segment also includes engineering services and the GE Additive business. Growth is steadier but lower-margin than the commercial segment.
Income Statement Overview
| Metric | 2024 | 2023 |
|---|---|---|
| Total Revenue | $38.4B | $32.9B |
| Cost of Revenue | $26.2B | $23.6B |
| Gross Profit | $12.2B | $9.3B |
| Operating Expenses | $4.8B | $4.4B |
| Operating Income | $7.4B | $4.9B |
| Net Income | $9.0B | $5.2B |
Key Financial Metrics
- Gross Margin: 31.8% — Improving as the services mix increases. Engine services carry margins well above original equipment sales.
- Operating Margin: 19.3% — A significant improvement and reflective of the aerospace pure-play’s superior economics. Management is targeting 20%+ operating margins as services continue to scale.
- Revenue Growth: +16.7% — Driven by strong services demand, increased engine deliveries (particularly LEAP), and pricing power in the aftermarket.
- Free Cash Flow: $6.1B — Strong and growing. The asset-light nature of services (selling spare parts and labor rather than new engines) generates excellent cash conversion.
- Orders Backlog: $166B — A record backlog provides years of revenue visibility. Airlines and militaries have committed to future engine purchases and long-term service agreements.
What to Watch
- Services growth durability — With global air travel continuing to grow (especially in Asia) and the installed engine fleet expanding, commercial services should maintain strong growth for years. This is the primary value driver.
- LEAP engine production — Boeing and Airbus production ramps depend on engine supply. GE/CFM’s ability to deliver LEAP engines on schedule directly impacts revenue growth and customer relationships.
- Supply chain challenges — The aerospace supply chain remains stressed, with shortages of components, skilled labor, and raw materials. These constraints limit production growth potential.
- Defense modernization — Rising global defense budgets benefit GE’s military engine business. New programs like the Next Generation Adaptive Propulsion (NGAP) engine for sixth-generation fighters represent long-term opportunities.
- Sustainability and RISE — The CFM RISE engine program targets 20%+ fuel efficiency improvements using open-fan architecture. Leadership in sustainable aviation could define the next generation of commercial aviation.