GE Aerospace: The Engine Under Your Holiday

"The last new entrant was GE, and so that tells you something."

– Sir Chris Hohn, TCI Fund Management, “In Good Company” Podcast, 2025

153,359.

That’s the number that was printed on 23 July 2026.

The busiest day of commercial flights ever recorded by Flightradar24 (Chart 1).

A Thursday. Nothing special about it. No royal wedding, no World Cup final, no once-in-a-generation event. Just an ordinary Thursday in late July on which 153,359 commercial aircraft took off and landed somewhere on this planet. Twelve months earlier, on the equivalent Thursday, the number was 144,806. Growth in one year: 5.9%.

Look at that chart for a moment, because it tells two stories at the same time.

The first is seasonality, and it is beautifully regular. Every year the same breathing pattern. A dip through January and February, a climb across spring, the peak in the second half of July, then a long exhale into November. School holidays, Ferragosto, Sommerferien: the great annual migration of humans towards water.

Summer holidays. Oh yeah.

The second story is the crater in the middle of the chart. We will come back to it at the end.

Because behind each of those 153,359 little lines on a screen sits something far less romantic than a holiday. Millions of hours of engine power that bring you from A to B. Thrust, measured in pounds. Turbine blades spinning at thousands of revolutions per minute, running hotter than the melting point of the metal they are made of, kept alive by cooling channels thinner than a human hair.

And here comes the personal note. If you are reading this on a lounger somewhere between Sardinia and Sylt, I am fairly confident that you were recently strapped to one of their products. Not a maybe.

Roughly three out of every four commercial flights on Earth are powered by engines from one company and its joint venture.

Enter GE Aerospace.

Chart 1: Commercial flights tracked by Flightradar24, 2018 to July 2026 – 153,359 on Thursday, 23 July 2026

GE Aerospace’s Business Model: The Razor, the Blade, and the Thirty-Year Contract

So what does GE Aerospace actually sell?

Not engines. Well, yes, engines. But that is not where the money is.

When a new engine programme launches, the manufacturer will happily hand it over at a discount of up to 70% off the list price. Read that again. They practically give the razor away.

Because the blade comes later.

A jet engine flies for more than twenty years. Six to ten years in, it comes off the wing for its first major overhaul, and it will be almost completely rebuilt at least once more after that. Those shop visits, and the parts that go into them, can account for as much as 70% of the lifetime revenue from that engine — which is why services carry nearly all of the operating profit.

The numbers behind it are almost absurd.

Roughly 80,000 engines installed around the world, about 50,000 commercial and 30,000 defense. $42 billion of revenue in 2025, some 70% of it services, and a backlog of $210 billion — five years of revenue already under contract (Chart 2).

We won’t relitigate the sector here. Long-time readers know why we love aerospace: the moat, the structural tailwind, the regulatory wall. We made the case in our Safran Weekly and in our aerospace study. Consider it read.

But how does GE differ from Safran, which we own as well, or from Rolls-Royce?

The narrowbody engines are the shared part. CFM International, the 50/50 joint venture between GE and Safran, builds the CFM56 and the LEAP. Anything with a CFM badge under an A320neo or a 737 MAX is a joint child.

What Safran does not have is the rest. The widebody engines — GE90, GEnx, GE9X — belong to GE alone, as does a defense business of some 30,000 engines. Rolls-Royce, out of the narrowbody game since selling its V2500 stake in 2012, competes essentially in widebody.

GE is the only one at scale in both categories, plus the military.

And a fun fact for the apéro: the Rolls-Royce parked in front of your hotel has nothing to do with the Rolls-Royce under the wing. The car brand has belonged to BMW since 2003.

There is one more difference, and it is the biggest of all. GE Aerospace had to be carved out of something.

On 3 January 2023, GE HealthCare was spun off. On 2 April 2024, GE Vernova followed. What was left on the launch pad was renamed GE Aerospace (you know our weakness for the magic of the spin-off from our Honeywell Aerospace Weekly).

The market’s verdict on that operation is the most remarkable chart of this week. But first, the difference between a narrow tube and a wide one.

Because that is where the money is actually made.

Let’s educate ourselves on this matter.

Chart 2: $42 billion of revenue, around 70% from services, $210 billion of backlog

Narrowbody, Widebody, and the Price of No Competition Among Engine Manufacturers

A narrowbody is a single-aisle aircraft. One corridor, three seats left, three right. The A320 family, the 737. Two engines, short and medium routes, five or six take-offs a day. The workhorse that flies you to Palma de Mallorca.

A widebody has two aisles. The 777, the 787, the A350. Far bigger engines, intercontinental routes, sometimes one flight a day — but that flight lasts twelve hours.

Why does the distinction matter?

Because an engine does not age with the calendar. It ages with cycles and hours. A cycle is one take-off and one landing, and take-off is the brutal part: full thrust, maximum temperature.

So narrowbody engines are cycle-driven. Many short flights, many take-offs, the shop visit arrives quickly. Widebody engines are hours-driven. Fewer cycles, longer time on wing — but each shop visit is a far larger bill.

GE sits on both sides of that table, and has done so for generations (Chart 3). On the narrowbody, the CFM56 — over 1.3 billion flight hours — hands over to the LEAP. On the widebody, the GE90 hands over to the GE9X.

Each generation inherits the fleet of the one before it.

GE accounts for roughly 55% of all widebody cycles flown, and around 70% of the GE90 fleet has not yet been through its second shop visit — the expensive one. On the narrowbody side, the LEAP installed base more than doubles between 2025 and 2030, and management expects LEAP profit to match CFM56 profit by that year.

Which brings us to the uncomfortable part.

Price.

Over the past five years GE Aerospace has traded at an average of around 37 times earnings. Today it is 43. The free cash flow yield averaged 2.9%; today it is 2.3%. Never a cheap stock, and less so now.

There are three honest reasons for the premium.

1. First, the conglomerate discount is gone. For two decades investors paid a penalty for a holding company nobody could model; the spin-offs removed it.
2. Second, margins. Commercial engine revenue grew 27% in the second quarter at a margin above 27%, the aftermarket 32% in the first half.
3. Third, visibility: a $210 billion backlog and service agreements that run ten years and more.

And now the line at the top of this page makes sense. Two players in narrowbody, two in widebody, and no new entrant in fifty years. Certification, capital, accumulated data, twenty-year customer relationships — the door has been shut for half a century.

And the risks are not zero. When Pratt & Whitney found a metallurgical flaw in its GTF, it cost over three billion dollars in cash charges. GE carries that same risk on every long-term service contract it signs.

A wonderful business, then. A “Good Story”. But you know our rule: a wonderful business is not automatically a wonderful investment. At 43 times earnings you are paying for a decade in which very little is allowed to go wrong.

So what does Mr. Market say?

Time for the “Good Chart”.

Chart 3: The engine ladder — from the CFM56 and the GE90 to the LEAP and the GE9X, and on to CFM RISE

GE Aerospace’s Good Chart: Thirty Years in One Line

Remember the crater in Chart 1.

In spring 2020 the sky emptied. Aircraft were parked in the desert, wings taped shut, engines silent. And GE earns when engines turn. No flights, no cycles, no shop visits, no spare parts. The aftermarket machine, so beautiful on the way up, works exactly the same way in reverse.

Add a conglomerate still carrying the wreckage of a failed finance arm and a struggling power business, and you get the left half of Chart 4: General Electric trading in 2020 at levels last seen in the 1990s.

Now look at the whole picture.

Three decades in a single line. The green box on the left is General Electric the «conglomerate»: three grand waves — 2000, 2007, 2016 — and two decades that led precisely nowhere. The two dashed lines mark the surgery: GE HealthCare on 3 January 2023, GE Vernova on 2 April 2024.

What follows is not a recovery.

It is a re-rating.

Record traffic, record aftermarket, expanding margins, and a discount that simply no longer applies. The engines went back to turning, and the tape noticed.

And the siblings?

GE Vernova — the electricity infrastructure play that AI data centres turned into a phenomenon — is up more than 600% since the split, while GE HealthCare, up roughly 20%, is the quiet reminder that not every spin-off flies.

Which brings us back to the beach.

153,359 flights on one ordinary Thursday in July. Every one of them a cycle. Every cycle a step closer to the next shop visit. The engine does not care whether the passenger is going to a board meeting or to Mykonos. It counts hours and cycles, and it sends the bill either way.

There is one thing, though, that the chart cannot show yet. Somewhere on a test stand, GE and Safran are running an engine without a cowling — open blades spinning in free air, promising more than 20% better fuel burn. It is called CFM RISE, and if it works it resets the clock on the entire installed base.

But that is a story for another Weekly. Enjoy the beach.

And on your flight back home, the next time you hear that whine at take-off, you now know exactly who is smiling.

The arvy boys, all partners invested alongside us and…

… GE Aerospace.

Chart 4: General Electric 1997–2026 — two decades of conglomerate, then the spin-offs of GE HealthCare (3 January 2023) and GE Vernova (2 April 2024)