GE Aerospace

Q2 2026 results on a non-GAAP basis: revenue was $10.2 billion, up 24%; operating profit was $2.7 billion, up 18%; EPS was $2.02, up 22%; and free cash flow was $3 billion, up 43%, with conversion over 140%. CES revenue rose 27% and margin was 27.3%, down 160 basis points; DPT revenue rose 16% and margin was 13.8%, up 30 basis points. For the first half, revenue was up 27%, EPS up 24%, and free cash flow up 31%. Full-year 2026 guidance was raised to revenue growth in the high teens, CES growth around 20%, commercial services growth in the low 20s, commercial equipment growth around 20%, DPT growth in the low double digits, operating profit of $10.55 billion-$10.75 billion, EPS of $7.65-$7.85, and free cash flow of $8.9 billion-$9.2 billion. Management said the full-year tax rate is now expected to be below 16.5%.

Larry Culp emphasized that GE Aerospace is executing with discipline, with customers at the center and FLIGHT DECK improving safety, quality, delivery, and cost. He framed the quarter as evidence of resilient demand and operational progress, citing faster turnaround times, improved supplier collaboration, and major LEAP durability milestones. His tone was confident but not complacent: he repeatedly stressed that the environment remains dynamic, that there is “unfinished business” on cost of ownership and time on wing, and that the team is focused on supporting customers and scaling for 2027 and beyond.

Rahul Ghai focused on the quarter’s financial leverage and guidance lift. He cited $2.7 billion of operating profit, 21.7% consolidated margin, $3 billion of free cash flow, and a $200 million improvement in working capital and AD&A, while noting a 16.7% tax rate and a 24 million share-count reduction tied to capital allocation actions. He said the stronger first half supports higher full-year profit and cash targets, with CES operating profit now expected at $10.25 billion-$10.35 billion and free cash flow at $8.9 billion-$9.2 billion; he also said cash conversion should normalize over time, but cash flow should still grow with earnings.

Analysts pressed management on macro uncertainty, the sustainability of service growth, cash flow conversion, supply constraints, LEAP shop visits, and whether durability kits pull work forward. Management said demand has been more resilient than expected, customer behavior has not changed materially, and the challenge is increasingly supply-side rather than demand-side, with shop visits and MRO capacity effectively oversubscribed. On cash flow, Rahul said the quarter benefited from lower working capital and some tariff refunds, but he still expects cash flow to grow with earnings even as conversion normalizes. On LEAP, Larry said the durability kit is a major step but will be a multi-year retrofit effort, not an immediate demand pull-forward, while Rahul said spare engine and parts trends are normalizing from very high levels.