GE Aerospace Sees 39% Services Growth, $170B Backlog; Parts Delinquency Rises
HON•GE Aerospace reported a 39% surge in commercial services revenue last quarter, citing a $170 billion backlog and 43% higher engine deliveries as services now account for 73% of revenue. Rising spare parts delinquency threatens 40% of services revenue and calls the 45.0 trailing P/E multiple into question.
1. Production Turnaround and Services Growth
Just two years after admitting a 20% sequential drop in engine output, management has gone silent on production issues as total engine deliveries rose 43% and commercial services revenue jumped 39% in the latest quarter. The Commercial Engines & Services segment now represents 73% of total revenue, grows at 24% annually, and is backed by a backlog exceeding $170 billion.
2. Spare Parts Delinquency Threatens Revenue
Spare parts delinquency has climbed, delaying shipments that make up roughly 40% of high-margin services revenue. With a trailing price-to-earnings ratio of 45.0 assuming smooth growth ahead, these supply constraints risk deferring revenue, squeezing profits and straining long-term customer relationships.
