GE Aerospace sees repair demand holding up despite aviation fuel shock

GE's CFM International joint venture recently received certification for a durability upgrade to the LEAP-1B engine used on Boeing’s 737 MAX. The upgrade is expected to roughly double time on wing, but Culp said fully retrofitting the existing LEAP-1A and LEAP-1B fleets would take until the early 2030s. The supply challenge is also playing out in the widebody market. Culp pushed back against concerns raised by Boeing that GEnx delivery delays could hold up its planned 787 production ramp, citing sharply higher shipments and several months’ worth of engines already at Boeing's Charleston, South Carolina, factory. Still, he said GE would have to keep raising deliveries to match Boeing's higher production targets. GE reported second-quarter adjusted profit of $2.02 per share, beating analysts' estimate of $1.86, according to LSEG. GE Aerospace has about $170 billion of commercial-services work in backlog, while the natural aging of the global engine fleet is moving more aircraft from lighter inspections into costlier overhauls. Company executives said there was no reason commercial-services growth should fall below its medium-term double-digit target in 2027, even after this year's stronger-than-expected performance. The question, however, remains how much of that demand GE can fulfill. Culp said the civil-engine supply chain has "really turned the corner" after years of shortages, but cautioned that the company still needed to increase output in the second half and again next year. Culp said the main risk over the next year or two would be a renewed geopolitical escalation that pushed fuel prices high enough to force airlines to raise fares beyond what passengers could absorb. That, he said, could destroy demand. For now, GE expects flight activity to return to modest growth in the second half and strengthen further in 2027. The longer-term challenge is increasing output while addressing airlines' complaints about the durability and ownership costs of newer engines. GE Aerospace raised its 2026 profit forecast on Thursday as demand for engine repairs and spare parts held up despite high fuel prices and airline schedule cuts, leaving supply constraints, rather than customer demand, as the bigger challenge into 2027. The engine maker's outlook underscores a paradox at the heart of aviation's fuel shock. Airlines have trimmed schedules to protect margins as the war in Iran pushed up fuel bills, but required engine maintenance cannot be deferred indefinitely. Shortages of new aircraft and replacement engines have also made existing fleets harder to replace, giving carriers another reason to keep older jets in service. Aircraft departures were roughly flat in the first half, but CEO Larry Culp told Reuters that GE had seen no meaningful change in customer behavior. The number of parked aircraft powered by its older CFM56 engines had declined since early March, he said, suggesting high fuel prices had not yet accelerated retirements in that fleet. GE's overhaul shops, meanwhile, were "wildly oversubscribed," Culp said. The company now expects adjusted earnings of $7.65 to $7.85 per share this year, up from $7.10 to $7.40 previously. It also raised its free-cash-flow forecast to between $8.9 billion and $9.2 billion. Its shares fell about 3% in morning trading amid a broader market decline.

GE Aerospace sees repair demand holding up despite aviation fuel shock

LEAP and GEnx programs in focus

Backlog and supply chain remain key themes

Outlook raised as aftermarket demand holds up

Executives say customer behavior has not changed

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