GE Aerospace (NYSE:GE) CFO Rahul Ghai said the company continues to see strong demand across commercial services, original equipment and defense programs, despite recent volatility in air traffic growth and persistent aerospace supply-chain constraints.
Speaking at a Morgan Stanley conference, Ghai said GE Aerospace has about 80,000 aircraft “under wing,” including 50,000 commercial aircraft and 30,000 defense aircraft. The company powers about two-thirds of U.S. combat aircraft, he said.
CPP acquisition targets capacity and technology
GE Aerospace recently announced its acquisition of CPP, a casting supplier, in what Ghai characterized as the largest acquisition for GE Aerospace as a standalone company. He said the transaction is intended to expand capacity, improve supplier delivery performance and accelerate the introduction of new airfoil technology.
According to Ghai, GE Aerospace expects the acquisition to generate about $200 million in synergies by the third year after closing, with synergies doubling by year six. The company expects the deal to be earnings-per-share and free-cash-flow accretive in its first year and to achieve double-digit return on invested capital a few years after closing.
Ghai said the new airfoil being developed by the company runs cooler and could improve engine durability. Bringing casting manufacturing expertise in-house could shorten the time required to bring that technology to customers, he said. However, he said GE Aerospace has not announced the timing for introduction of the new LEAP airfoil, which remains in testing and will require Federal Aviation Administration certification.
He added that CPP does not represent a broader strategy to vertically integrate every element of the supply chain. Instead, GE Aerospace is working with suppliers through joint operational-improvement efforts, capital investments and more than 500 engineers deployed in its supply base.
Services backlog and shop demand remain elevated
Ghai said GE Aerospace expects commercial services revenue to grow more than 20% in 2026, supported by a $170 billion services backlog and an elevated volume of engines awaiting shop induction. The company reported a total backlog of $210 billion.
While air traffic growth slowed in recent months and was down during the second quarter, Ghai said the company has not seen airlines change long-term fleet plans. Aircraft retirements are down about 10% year over year, while the number of engines removed from aircraft but not yet inducted into GE Aerospace shops was up nearly 60% from a year earlier.
“The engines continue to come off,” Ghai said, adding that engine removals are expected to rise by more than 10% in the first half of 2027.
The company said it was 40% oversubscribed on shop visits for the year when it reported second-quarter results. Ghai said pent-up maintenance demand and airline backlog provide support not only for 2026 but also into 2027.
CFM56 and LEAP outlook
Ghai said retirement rates for the CFM56 fleet have remained below earlier expectations. GE Aerospace initially anticipated CFM56 retirements of 3% to 4% for 2026, later lowered that range to 2% to 3%, and now expects retirements of roughly 1.5% to 2%.
He attributed the lower retirement rate in part to airlines taking a more cautious approach to reducing capacity following the COVID-19 period, as well as the durability of the CFM56-powered fleet. The company now expects 2,300 to 2,400 CFM56 shop visits this year and next year, toward the upper end of that range.
Ghai also cited emerging demand from power-generation customers seeking to convert CFM56 engines for data-center-related power needs. He said this demand could reduce the availability of used material in the market and support incremental spare-part sales. GE Aerospace expects CFM56 revenue to remain stable through 2028, followed by modest growth from pricing and work-scope changes.
For LEAP engines, Ghai said durability kits are expected to bring time on wing in line with the company’s financial model. The kits are already in use for Airbus applications and are expected to be introduced on Boeing applications in the first quarter of 2027.
GE Aerospace expects LEAP shop visits to grow about 25% annually through 2030. Ghai said the company expects LEAP profit to reach parity with CFM56 profit by 2030, supported by a doubling of the LEAP installed base from 2025 levels, repair growth of more than 20% annually and expansion of third-party overhaul activity.
Wide-body production and cash flow
On wide-body programs, Ghai said GEnx deliveries rose 50% year over year in the second quarter and are expected to show stronger year-over-year growth in the third quarter. He said the GEnx installed base is expected to double from 2024 to 2030, while more than half of the fleet has yet to undergo its first shop visit and 90% has not undergone a second visit.
Ghai said the GE9X engine is not expected to delay the Boeing 777X entry into service planned for next year. He said GE Aerospace has a redesigned mid-seal in production and began shipping engines incorporating the part to Boeing in the third quarter. FAA certification for the part is expected within the next several months, he said.
GE Aerospace expects more than $1.5 billion of profit growth in 2026 and free-cash-flow conversion of about 100% of net income over time. Ghai said conversion should remain above 100% for at least the next two to three years, though contract assets and liabilities are expected to become less favorable as shop-visit activity increases.
About GE Aerospace (NYSE:GE)
GE Aerospace (NYSE:GE) is a global aerospace company that designs, develops, manufactures and services aircraft engines and related systems. Its portfolio serves commercial aviation, military and defense, business and general aviation, and other aerospace markets.
The company’s products and services include commercial and military aircraft engines, integrated engine systems, avionics, mechanical systems and digital solutions. GE Aerospace also provides maintenance, repair, overhaul, spare parts, technical support and other lifecycle services for aircraft propulsion and related equipment.
GE Aerospace traces its roots to the aviation activities of General Electric, which began developing aircraft engines during World War I.
