GE Aerospace

It's interesting watching GE Aerospace navigate the Boeing quality crisis — on one hand slower MAX deliveries hurt new engine volume, but on the other hand older 737NGs stay in service longer and those CFM56 overhauls keep flowing through GE's MRO network.

The US Air Force awarded GE Aerospace a contract modification for additional F414 engines to support F/A-18 Super Hornet sustainment and potential foreign military sales to India. The F414 is also the engine platform for India's indigenous fighter development program, deepening that strategic relationship.

The stock is priced for near-perfection right now trading at a premium to peers and any stumble in Boeing's production recovery could hurt engine deliveries more than the bull case assumes. Supply chain constraints on castings and forgings are still a real bottleneck that doesn't get enough attention.

GE Aerospace's defense business doesn't get nearly enough credit — between the T901 upgrade competition win for Black Hawk helicopters, ongoing F110 production for F-16s globally, and advanced engine programs, this is a serious Tier 1 defense supplier not just a commercial play.

How worried should I be about the GE9X production ramp given that the 777X certification keeps getting pushed back by the FAA? Boeing has delayed that program so many times it's almost a running joke, and GE has real capital tied up in that engine development.

The LEAP engine backlog is absolutely enormous right now and Boeing and Airbus can't build narrowbodies fast enough to absorb demand. GE Aerospace is essentially a toll road on every single-aisle departure for the next decade. Services revenue is where the real money is and it keeps compounding.

The spinoff of GE Vernova earlier this year was genuinely transformative — you now have a pure-play aerospace and defense company with none of the power generation noise clouding the multiple. The market is still figuring out how to value this thing.

The RISE program — the open fan engine CFM is developing with Safran — could be the biggest leap in commercial propulsion efficiency in 30 years and GE gets half of it. Airlines are desperate to cut fuel burn and this technology targets over 20% improvement versus current LEAP engines.

I've been tracking GE Aerospace's headcount and capex and I'm not convinced they have the manufacturing capacity to hit the engine delivery numbers they're guiding to by 2025-2026. The skilled labor shortage in aerospace is not a temporary problem and competitors are fishing from the same limited talent pool.

RTX's GTF engine is eating into GE's market share on the A320neo family and Pratt keeps winning campaigns GE should be winning. Meanwhile LEAP has had its own blade durability issues that added costs nobody likes to talk about.

GE Aerospace reaffirmed its full-year 2024 operating profit guidance of roughly $6.2 billion and raised free cash flow expectations during its most recent earnings call. CEO Larry Culp pointed to strong commercial engine deliveries and continued Defense segment growth as the primary drivers.

Does anyone have a good sense of what percentage of GE Aerospace's services revenue is under long-term rate-per-flight-hour contracts versus time-and-material? I'm trying to model how sticky the revenue actually is during a downturn.