GE · Q2 2025 Earnings
BullishGE Aerospace
Reported July 17, 2025
30-second summary
30-second take: GE Aerospace put up $11.0B in revenue (+21% YoY), $2.3B operating profit at a 23% margin, and $2.1B free cash flow (+92% YoY) — then raised the FY25 guide across every line and walked the 2028 operating profit target up by $1.5B versus the 2024 investor day. The story is no longer demand: backlog is ~$175B with 1,600+ engines sold out through decade-end. It's execution — suppliers delivered 95% of committed volume across critical sites (up roughly 2x from early 2024), enabling a 40% capacity expansion by 2030 and a services revenue trajectory that just added $4B to the 2028 outlook versus a year ago.
Headline numbers
EPS
Q2 FY2025
$1.66
Revenue
Q2 FY2025
$11.00B
+21.0% YoY
Free cash flow
Q2 FY2025
$2.10B
Operating margin
Q2 FY2025
23.0%
Key financials
Q2 FY2025| Metric | Q2 FY2025 | YoY |
|---|---|---|
| Revenue | $11.00B | +21.0% |
| EPS | $1.66 | — |
| Operating margin | 23.0% | — |
| Free cash flow | $2.10B | — |
Guidance
Prior quarter data unavailable — comparison not possible.
Segment KPIs
Q2 FY2025| Segment | Q2 FY2025 | YoY |
|---|---|---|
| Commercial Engines & Services (CES) | $7.99B | +30.0% |
| Defense & Propulsion Technologies (DPT) | $2.563B | +7.0% |
| CES Services Revenue Growth | +29% | — |
| CES Orders | $11.7B | — |
Other KPIs
Q2 FY2025| Segment | Q2 FY2025 |
|---|---|
| Adjusted Revenue Growth | +23% |
| Operating Profit | $2.3B |
| Free Cash Flow Growth | +92% |
| Commercial Engines Unit Volume | +45% |
| Orders Growth | +20% |
| Backlog | ~$175B |
Management tone
The dominant shift this quarter is that aerospace stopped being a demand story and became an execution story. "We are effectively sold out through the rest of this decade with more than 1,600 commercial and defense engines in backlog" is the kind of sentence that closes the demand debate; the entire investor conversation now pivots to whether GE can build them, install them, and shop-visit them at the cadence the FY28 model requires.
Supply chain commentary moved from structural headwind to stabilized platform. Management cited material input up 10% sequentially at priority supplier sites and 95% of committed volume delivered from 12 critical suppliers across 18 sites, "up nearly two-fold versus early last year." That is the underpinning for the 40% internal-and-external capacity expansion by 2030, and it's the change that makes the FY28 raise credible rather than aspirational.
The CFM56 narrative reversed. Where retirement normalization had been treated as imminent, management now points to first shop visits still ahead for ~40% of the fleet, peak revenue in 2028, and retirements of just ~0.5% in 2025 rising to ~3% in 2026. That extends the highest-margin services runway by several years and is the single biggest input to the $4B services revision.
GE9X flipped from headwind to driver. Widebody profit is now guided +40% supported by GE90 and GE9X shop visits, with the installed base doubling by decade-end. Near-term losses on 9X are still "a few hundred million" with peak losses in 2026, but the language ("30% cost reduction by 50th unit, another 30% by 250th") is the language of a program management believes it controls.
LEAP profit parity with CFM56 by the end of the decade is the new anchor for the long-term services margin bridge. That is a sharper commitment than the prior "approaching parity" framing and is what gets margins above 21% in 2028.
Recurring themes management leaned on this quarter:
Risks management surfaced:
Q&A highlights
David Strauss · Barclays
Asking for 777X production rate assumptions underlying loss forecast, lead delivery timing in 2028, and how much better lead profitability on OE side and Gen X profitability can offset 9X headwinds.
Management detailed 777X (9X) program status including first engine shipments to Boeing in 2024, increasing shipments in H2 2025. Expects couple hundred million dollars profit headwind in 2025, targeting 30% cost reduction by 50th unit and another 30% by 250th engine. Peak losses expected a year after EIS (2026), with losses still a few hundred million higher in 2028 versus 2025 but program expected profitable in 2030s. LEAP volume guidance of 2,500 engines in 2028 with 15-20% delivery growth maintained.
Gautam Khanna · TD Cowan
Requested elaboration on supply chain state, pinch points, and expectations for gross inflation over the forecast period.
Management highlighted supply chain improvements including 10% sequential improvement from Q1 to Q2, with 12 critical suppliers across 18 sites delivering to commitments at 95% range. Emphasized improved collaboration and technical problem-solving with supply base. Expects supply chain environment to remain tight with no letoff expected in inflation through forecast period. Pricing expected to cover inflation and support 2028 profit drivers.
Ken Herbert · RBC Capital Markets
Asked to parse out the 15% higher narrowbody services revenue through 2028, specifically whether improvement is driven by fundamental changes in airline spending (more shop visits per engine) or supply chain unlock and turnaround time improvements.
Management provided broad context that services outlook improved by $4 billion from March prior year, driven by increased growth expectations (high single digit to double digit growth) on higher 2024 base. For narrowbody specifically, improvement driven by two factors: 600 incremental CFM56 shop visits between current outlook and prior year due to fleet retirement patterns and airlines extending leases (renewals at 95% vs 40% historically), plus growing LEAP install base. Same dynamic evident on widebody side with GE90 and GEnx.
Jason Gursky · Citi
Asked about international defense growth participation strategy, specifically whether company needs additional European partnerships or investments to capture European defense budget growth over next decade.
Management stated optimism around defense growth will be fundamentally within defense and systems focused on existing programs across rotorcraft, combat jets, and trainers. Highlighted that increased budgets play into existing footprint well. Referenced F-110 agreement and noted international contracts typically priced better with commercial-like structures yielding both revenue and margin benefit. Emphasized Avio Aero position in Italy as native European defense footprint with exposure to Eurofighter, EuroTron, and G-Cap programs. Open to partnerships but satisfied with current positioning given strong backlogs.
Noah Poppenack · Goldman Sachs
Asked to quantify duration of pent-up aftermarket demand and whether 2025-2028 guidance assumes all pent-up demand and associated pricing or just normal fleet aging and shop visit patterns.
Management acknowledged difficulty in quantifying pent-up demand duration, noting multiple favorable factors including aging fleet, component/labor availability constraints, pricing dynamics, and free cash flow cycles. Referenced $175 billion backlog as quantitative proxy capturing most dynamics. Stated company working to satisfy backlog over next three years but acknowledged uncertainty on whether pent-up demand fully flushes in three, five, or more years. Positioned revised outlook on confidence from backlog visibility and customer fleet plans.
What to watch into next quarter
CES services growth sustain rate: Q2 services hit +29% YoY. Watch whether Q3 holds above the high-teens FY guide line — deceleration below ~20% would signal the pent-up demand front-loading risk Goldman flagged.
Supplier committed-volume delivery progression: 95% across 12 critical suppliers is the new baseline. A reversal below 90%, or a callout on specific bottleneck sites, would jeopardize the 40% capacity expansion math underpinning FY28.
Tariff realization vs. the $500M FY25 embed: management assumed reciprocal tariffs resume after the pause. Watch whether the realized impact tracks above or below $500M and whether pricing actions fully offset.
GE9X loss progression toward 2026 peak: Q3 disclosure on 9X unit shipments and per-unit cost reduction against the "30% by 50th unit" target. Slippage here pushes the profitability crossover past the 2030 window.
LEAP delivery cadence: the 15–20% delivery growth target for 2025 implies a meaningful H2 step-up. A miss would echo into the 2,500-engine 2028 anchor.
DPT growth inflection: +7% YoY in Q2 sits in the middle of the unchanged mid-to-high-single-digit FY range. Watch for any acceleration tied to international defense localization given the Avio Aero positioning.
Sources
- GE Aerospace Q2 2025 earnings release, filed via SEC EDGAR — https://www.sec.gov/Archives/edgar/data/40545/000004054525000108/ge2q2025earningsrelease.htm
- GE Aerospace Q2 2025 earnings call commentary (management remarks and Q&A as captured in extraction inputs)
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