GE · Q1 2026 Earnings
BullishGE Aerospace
Reported April 21, 2026
30-second summary
30-second take: GE Aerospace opened FY26 with $11.6B adjusted revenue (+29% YoY), $1.86 non-GAAP EPS, and $1.66B free cash flow — well above the "high-teens" Q1 cadence management telegraphed on the Q4 call. Despite the beat, management explicitly held the full-year guide across the board (revenue +LDD, EPS $7.10–7.40, operating profit $9.85–10.25B, FCF $8.0–8.4B) and is now "trending toward the high end" of each range. The one assumption that did move: full-year departures cut from mid-single-digit growth to flat-to-low-single-digit, absorbing a Middle East conflict reserve. Management told Morgan Stanley they would be raising guidance outright "if not for current events" — and they've de-risked the existing guide further by pulling two-thirds of FY26 shop visit engines off-wing already and locking 95% of Q2 spare parts in backlog.
Headline numbers
EPS
Q1 FY2026
$1.86
Revenue
Q1 FY2026
$11.61B
+29.0% YoY
Free cash flow
Q1 FY2026
$1.66B
Operating margin
Q1 FY2026
21.8%
Key financials
Q1 FY2026| Metric | Q1 FY2026 | YoY | Q4 FY2025 | QoQ |
|---|---|---|---|---|
| Revenue | $11.61B | +29.0% | $12.72B | -8.7% |
| EPS | $1.86 | — | $1.57 | +18.5% |
| Operating margin | 21.8% | — | 19.2% | +260bps |
| Free cash flow | $1.66B | — | $1.76B | -5.8% |
Guidance
Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.
New guidance
| Metric | Period | Guide | YoY |
|---|---|---|---|
| Services Revenue Increase | FY 2026 | Approximately $4 billion | — |
Changes to prior guidance
| Metric | Period | Prior guide | New guide | Δ | Result |
|---|---|---|---|---|---|
| Revenue (Adjusted) | FY 2026 | +LDD (low double digits) | +21% | +21% vs prior +LDD (low double digits); actual FY revenue $42.3B | Raised |
Reaffirmed unchanged this quarter: EPS (Non-GAAP) ($7.10 - $7.40), Operating Profit (Non-GAAP) ($9.85B - $10.25B), Free Cash Flow (Non-GAAP) ($8.0B - $8.4B), Operating Profit Margin (Non-GAAP) (21.4%), FCF Conversion (>100%), CES Revenue Growth (Mid-teens), CES Equipment Revenue Growth (Mid- to high-teens), CES Operating Profit ($9.6B - $9.9B), DPT Revenue Growth (Mid- to high-single-digit), DPT Operating Profit ($1.55B - $1.65B)
Segment KPIs
Q1 FY2026| Segment | Q1 FY2026 | YoY |
|---|---|---|
| Commercial Engines & Services | $8.92B | +34.0% |
| Defense & Propulsion Technologies | $3.214B | +19.0% |
| CES Services Revenue Growth | +39% | — |
| CES Operating Profit Margin | 26.4% | — |
| DPT Operating Profit Margin | 11.8% | — |
Other KPIs
Q1 FY2026| Segment | Q1 FY2026 |
|---|---|
| Total Orders | $23.0B |
| Commercial Services Backlog | $170B |
| Engine Deliveries YoY Growth | +43% |
| Operating Profit Margin (Non-GAAP) | 21.8% |
| Free Cash Flow Conversion | >100% |
Management tone
Q2-2025 execution story crystallizes → Q3-2025 second consecutive across-the-board raise → Q4-2025 $10B profit milestone pulled forward two years → Q1-2026 guide held flat with explicit macro reserve language, despite the underlying business running ahead.
Services demand framing shifted from "structurally divergent" to "insulated from near-term volatility." Three quarters ago (Q2-2025), management framed services growth as outrunning departures because of pent-up demand. By Q3 it was "structural divergence." This quarter, the framing flipped again — two-thirds of FY26 shop visit engines are physically off-wing already, and 95% of Q2 spare parts are in backlog. The quote: "all shop visits for the quarter already off-wing." What was a demand thesis is now a logistics thesis — the revenue is essentially already produced as inventory work-in-process, not waiting for air traffic to recover.
Supply constraints flipped from operational risk to competitive moat. In Q2-2025, supplier delivery hitting 95% of committed volume was the unlock story. In Q3, FlightDeck was the operating model. This quarter management quantified the inverse view: "Spare parts delinquency, which represents shipments that have been delayed due to material availability constraints, is up roughly 70% since the end of 2024." The signal is that demand is so far ahead of supply that the constraint itself creates forward revenue visibility and pricing power. This is the same metric framed differently — and the reframing matters.
Macro reserve language is new and explicit. Where Q3-2025 introduced 2026 framing and Q4 pulled forward the $10B milestone, this quarter introduced a defensive posture inside an offensive print: "we are maintaining our guidance across the board" despite Q1 running far ahead and Morgan Stanley pulling out that guidance would be raised absent Middle East conflict assumptions. The Middle East departure decline is now quantified (~5% of total departures, high-single-digit Q1 decline), and the FY26 departures assumption was cut from mid-single-digit to flat-to-low-single-digit. The deceleration management telegraphed in Q3 has been re-allocated: H2 services growth steps down from Q1's +39% / Q2's high-teens to mid-to-high-single-digits, fully accommodating the worst-case Middle East scenario.
FlightDeck migrated from corporate program to quantified competitive output. Q4 called FlightDeck "the operating model." This quarter management put specific output numbers behind it: supplier at Terre Haute increased output >40% via FlightDeck collaboration; AI-based material assistant at Lafayette predicts shop visit work scopes nine months in advance; leak HPT repair time reduced >50% at McAllen via cell redesign. The shift is from operating philosophy to measurable production-line acceleration with AI-enabled forward visibility.
LEAP margin parity timeline got sharper. Q2-2025 said "by end of decade." This quarter Deutsche Bank pulled out 2028 as the year LEAP service margins reach overall CES levels, with internal repairs doubling YoY in 2026 and external channel mix at 15% of LEAP shop visits (up from ~10% 18-20 months ago). The path is now sequenced rather than promised.
Recurring themes management leaned on this quarter:
Risks management surfaced:
Q&A highlights
David Strauss · Wells Fargo
Clarification on expected impact of lower departure growth forecast on services growth timing (2026 vs 2027), and whether management expects CFM56/GE90 retirement increases or lower utilization impacts.
Management expects strong Q2 visibility supporting high-end 2026 guidance. Acknowledged lag effects from sustained departure softness but emphasized backlog and visibility should keep them within range. For 2027, noted low retirement rates, young fleet with many aircraft still pre-first-shop-visit, and historically strong traffic recovery post-downturns suggesting demand pushout rather than destruction.
Sheila Kailu · Jefferies
Services growth trajectory showing 39% in Q1 and high-teens in Q2 implying mid-to-high single digits in H2; request for visibility detail through summer, location of post-Q2 risks, and assumptions on retirement rates for 2026-2027.
Management confirmed 95% of Q2 spare parts in backlog and all required shop visit engines already in queue. About one-third oversubscribed on engine work off-wing for Q2-Q3. Retirement rates for 2026 assumed at 2% but Q1 came in sub-1%; already factored in 3-4% increases for 2027. Cautious on H2 due to unknown Middle East conflict duration but order trends holding.
Christine Lewek · Morgan Stanley
Inquiry whether higher engine removal pipeline visibility (above shop visit guide) is contemplated in upper-range 2026 outlook, or if potential exists for upward guidance revision if Middle East situation resolves in Q3.
Management stated that absent current events, they would be raising guidance rather than just guiding to high-end of range. Potential for upward revision exists but contingent on improved material flow to reduce delinquency on spare parts and shop visits. Currently factoring $4 billion services growth for 2026.
Scott Doishley · Deutsche Bank
Update on LEAP aftermarket profitability and margin trends in 2026 vs 2025, plus long-term path to margin expansion on the LEAP program.
LEAP services margins improving in 2026. Improvement driven by increased shop volume, developing internal repairs (expected to double year-over-year), and growing external channel mix (now 15% of shop visits, up from 10% 18-20 months ago). Expect LEAP service margins to reach overall CES service levels by 2028.
John Godden · Citi
Concern that margin risk exists if fuel shock continues and retirement spikes occur; request for management reaction on CES margin risk and what positive offsets might exist if aviation deteriorates further.
Management expects flattish CES margins for 2026 with $4 billion services growth (two-thirds coming in H1). Service margins up year-over-year in Q1 despite OE headwinds. Full-year service margins expected flat. LEAP margins approaching overall CES levels in next couple years; 777X losses expected to peak by 2028 with 50% cost reduction. Accelerated profit and margin expansion expected post-2028 when LEAP and 777X headwinds resolve.
Answers to last quarter's watch list
What to watch into next quarter
Q2 services growth print vs. the "high-teens above FY guide" cadence: management explicitly guided Q2 services to high-teens. A print below 15% would signal Middle East conflict impact is exceeding the embedded reserve; a print above 20% would intensify pressure to raise the EPS guide on the Q3 call.
Middle East conflict resolution and any associated guide revision: Morgan Stanley got the clearest signal yet that the guide is artificially constrained by geopolitical assumptions. If Middle East departure decline narrows to mid-single-digit or better in Q2, watch for an outright guide raise on the Q3 call.
9X unit shipments and dollar loss disclosure: with 50% cost reduction targeted by 2028, Q2 is the second opportunity to see whether the cost-down curve is executing. Continued silence on per-unit economics is itself a negative signal.
CES margin sequential trajectory: Q1 at 26.4% implies meaningful H2 compression to hit the flat-FY framing. Watch whether Q2 holds above 25% — anything below 23% would suggest equipment mix and OE drag are arriving faster than modeled.
FCF conversion path to FY $8.0–8.4B: Q1 conversion >100% is a strong start but implies ~80% conversion for the balance of FY26. Watch whether Q2 conversion stays above 90% or steps down sharply, which would signal inventory build for the LEAP capacity doubling is consuming cash faster than budgeted.
Spare parts delinquency direction: up ~70% since end of 2024 is currently framed as forward revenue visibility. If delinquency widens further in Q2, the constraint shifts from supportive to genuinely binding — watch for any callout on supplier site-level remediation.
Sources
- GE Aerospace Q1 2026 earnings release, filed via SEC EDGAR — https://www.sec.gov/Archives/edgar/data/40545/000004054526000026/ge1q2026earningsrelease.htm
- GE Aerospace Q1 2026 earnings call commentary (management remarks and Q&A)
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