Aircraft Engines & Propulsion

GE Aerospace is leaning on its Commercial Engines & Services segment as its key growth driver, with second-quarter 2026 segment revenues up 27% and orders up 18% year over year as engine deliveries rose 26%. In the first half of 2026, the company booked GEnx orders from United Airlines and Delta Air Lines for Boeing 787 Dreamliners, LEAP orders from American Airlines and Copa Airlines, an order from Copa Airlines for up to 120 LEAP-1B engines for its Boeing 737 MAX fleet, and a long-term materials agreement supporting Ryanair's fleet of approximately 2,000 CFM56 and LEAP engines. During 2025, GE Aerospace secured more than 500 engine wins at the Dubai Airshow, including flydubai GEnx deals and Riyadh Air LEAP-1A orders, plus a Cathay Pacific order for GE9X engines on its Boeing 777 9 aircraft and a Qatar Airways deal for more than 400 GE9X and GEnx engines that stands as the largest widebody engine deal in the company's history. The company is also advancing its FLIGHT DECK lean model, with supplier improvements supporting revenue growth. Among peers, RTX reported 16% organic sales growth in the second quarter, while Howmet Aerospace's commercial aerospace revenues rose 28% year over year in the second quarter of 2026, constituting 53% of its business.

GE Aerospace holds a Zacks Rank #2 (Buy), with consensus earnings estimates for the current quarter, fiscal year, and next fiscal year all revised higher over the past 30 days. The company is expected to post earnings of $2.01 per share for the current quarter, a year-over-year change of +21.1%, while the Zacks Consensus Estimate has moved +0.7% over the last 30 days. For the current fiscal year, the consensus estimate of $7.91 points to a +24.2% change from the prior year and has risen +0.6% over the past month, and for the next fiscal year the $9.04 estimate indicates a +14.3% change and has increased +0.5%. Revenue forecasts call for $12.66 billion in the current quarter, up +12% year over year, with current and next fiscal year estimates of $50.56 billion and $55.85 billion, indicating +19.5% and +10.5% changes respectively. In its last reported quarter, GE posted revenues of $12.63 billion, up +24.5% year over year and a +6.52% surprise versus the Zacks Consensus Estimate of $11.86 billion, with EPS of $2.02 versus $1.66 a year ago and an EPS surprise of +8.6%.

JPMorgan said in a note Wednesday that European defense investors are favoring companies with long-duration order books and hard-to-replace products, while marking down those whose technology could be displaced. The European defense sector has underperformed local markets by about 6% this year on average, though with wide variation between individual stocks, analyst David Perry noted. JPMorgan rates BAE Systems, Leonardo and Babcock Overweight, saying all three have those defensive characteristics, while investors have significantly de-rated companies such as Rheinmetall, CSG and Renk on fears their technology could be displaced. JPMorgan placed MTU Aero Engines and Leonardo on Positive Catalyst Watch, ahead of MTU's capital markets day on Nov. 30 and Leonardo's industrial plan update in March 2027, and put Rheinmetall on Negative Catalyst Watch, saying it does not expect the company to cut its 2030 sales goal of 50 billion euros even though the bank's own forecast is 36.9 billion euros. Perry said the debate over technology displacement is complex and the answer will not be clear for many years, making investor events at Rheinmetall on Nov. 27 and Renk on Dec. 8 important, and added that Rolls-Royce and Safran should remain strong performers over the medium term and are core holdings.

GE Aerospace and Kratos Defense successfully ignited the GEK800 turbofan cruise missile engine, a fresh data point for investors watching General Electric's defense story. The news lands against a mixed stretch for the share price: a 30 day share price return of 7.21% and a 90 day share price return of 15.22%, alongside a 1 year total shareholder return of 6.08% and a very large 5 year total shareholder return. General Electric now trades only slightly below some intrinsic value estimates while sitting well under the average analyst target, and on the narrative view its fair value sits at $307 against a last close of $317.89, a 3.5% overvalued reading. On the P/E lens the shares trade on 36.8x earnings, above both the 35.6x industry average and the same 35.6x peer group level, and above a fair ratio estimate of 34.7x. The company's reliance on Boeing's production tempo and exposure to tight aerospace supply chains remain the key risks to the wide moat narrative.

Kratos Defense & Security Solutions and GE Aerospace announced the successful first ignition of the GEK800 Serial Number 1 turbofan engine on September 21, a milestone in a program the U.S. military has designated the F143-ZZ-100. The test, conducted at Kratos' X-58 facility, achieved a 100% success rate for the development phase and keeps the affordable, high-performance propulsion system on schedule for advanced cruise missiles and uncrewed aerial systems. For Kratos, the milestone supports a Government Solutions segment that posted $379.7 million in Q2 2026 revenue, up 22.0% organically, with Turbine Technologies up 43.3% organically, a consolidated book-to-bill ratio of 1.1x and $2.084 billion in backlog, as the company ramps full-year 2026 revenue guidance to $1.750–$1.810 billion. GE Aerospace's Defense & Propulsion Technologies segment reported $3.4 billion in Q2 2026 revenue, up 16%, and raised full-year DPT operating profit expectations to $1.6–$1.7 billion. Kratos also faces cash conversion pressure, with $11.0 million in Q2 2026 operating cash outflow and $18.9 million in negative free cash flow, while GE's DPT margins face ongoing pressure from investments and inflation.

Chancellor John Healey has set out plans to reindustrialise Britain, announcing a £100 million fund for local mayors to boost apprenticeships, a £300 million investment by Rolls-Royce in British factories, and confirmed support for British shipbuilding. In his speech to the Labour Party conference in Liverpool, Healey said the new Local Apprenticeship Service would see teams acting like football scouts to link young people with firms, describing it as a down payment on work to tackle the almost one million young people not in employment, education or training. He also confirmed previously trailed plans for £6 billion of government contracts for British shipyards, and said Rolls-Royce would invest £300 million in factories in Derby, Bristol, Glasgow and Rotherham. Healey, who will deliver his first Budget next month, acknowledged he did not have the money available to his predecessor Gordon Brown and sought to reassure markets that fiscal discipline would be at the core of his Budget. The speech came as diesel hit a record 199.18p a litre and the Confederation of British Industry said firms across the private sector expect activity to fall in the three months to December, though CBI chief executive Rain Newton-Smith said Healey had set out a strong vision with many of the right signals.

GE Aerospace has begun shipping GE9X engines with a redesigned mid-seal to Boeing and expects FAA certification of the modified part within the next few months, CFO Rahul Ghai said at a Morgan Stanley conference, expressing confidence the durability issue will not delay the Boeing 777X's planned 2027 entry into service. Testing showed the original seal, which connects the engine's front and rear sections, lacked the durability GE expected; the company identified the root cause, completed a redesign, validated the new component internally, and incorporated it into engines now moving through production. Boeing can continue using the original seal for current certification work, including approvals required before ETOPS testing, while GE pursues separate FAA approval for the redesigned component in production aircraft, allowing regulatory work to advance in parallel. The GE9X exclusively powers the 777X, and GE previously reported an order book exceeding 950 engines, with Emirates alone having since increased its total order to more than 540 units. Boeing CEO Kelly Ortberg has separately warned that regulatory work on the 777X could extend into 2027 because of engine-certification issues, and GE has not disclosed the expense associated with testing the new seal, modifying engines or addressing units that already contain the original component.

Boeing and Turkish Airlines have finalized an agreement for up to 150 737 MAX jets, the carrier's largest single aisle order with Boeing. The deal covers firm orders and options across the 737 MAX family and aligns with Turkish Airlines' expanding narrow body fleet plans. Boeing, a US$158.0b aerospace and defense group, frames the agreement as part of broader airline efforts to renew fleets and support lower emissions on short and medium haul routes. The order reinforces Boeing's position in a key Eurasian hub and supports higher-volume production that can spread fixed costs, while also magnifying execution and supply chain risks already flagged for the 737 program. Boeing's commercial aircraft backlog exceeds $500 billion, with firm orders for the 737 and 787 programs stretching to the next decade.

United Airlines Holdings received its first Airbus A321XLR equipped with Pratt & Whitney GTF Advantage engines, an early step in the carrier's broader fleet modernization and long-haul narrowbody deployment plans. The new GTF Advantage powerplants are designed to provide higher thrust, improved durability, and more efficient fuel burn on long-range routes. United operates a large network of passenger routes across the US, Canada, the Atlantic, the Pacific, and Latin America, and the A321XLR with GTF Advantage engines plugs directly into its Narrative tying premium cabins and a modernized, fuel efficient fleet to stronger economics on long haul routes. The delivery backs the bullish view that United can use aircraft and engine choices to chase higher-yield passengers while keeping unit costs in check, since longer range narrowbodies open thinner transatlantic or deep Latin American routes where a widebody might struggle to fill. On the bear side, rolling out new engine technology adds complexity and capital intensity just as Delta and American pursue their own fleet plans, making reliability and maintenance performance on GTF Advantage powered jets an early proof point for whether the approach feeds through to resilient margins.

GE Aerospace has agreed to acquire Consolidated Precision Products, one of the world's largest makers of precision sand castings, for $11.75 billion in its biggest deal since becoming a standalone company in 2024. The company plans to use $7 billion of cash and fund the remainder with new debt, with the transaction expected to close in the second half of 2027. CPP supplies components for GE's LEAP and GEnx commercial engines, and about 70% of its revenue comes from commercial and defense engines; it is expected to generate roughly $2 billion in revenue in 2027. The deal values CPP at about 26 times its expected 2027 core profit before expected synergies, or roughly 18 times including them. CEO Larry Culp said investment in casting capacity is needed to support simultaneous demand across commercial engines, aftermarket and defense, and GE expects its demand for airfoils to rise more than 30% by 2030 compared with 2026 levels. Vertical Research analyst Robert Stallard told Reuters the deal makes strategic sense given tight engine casting supply, but said it remains to be seen how it will affect CPP's non-GE customers such as RTX's Pratt & Whitney; GE shares were little changed after the announcement while casting rival Howmet Aerospace fell about 8%.

GE Aerospace raised its full-year 2026 operating profit guidance to a range of $10.55-$10.75 billion, up from a previous forecast of $9.85-$10.25 billion, even as second-quarter operating margin fell 130 basis points to 21.7%. The company reported second-quarter 2026 operating profit of $2.75 billion, an increase of 18% year over year, but cost of sales surged 26.7% to $8.7 billion, selling, general and administrative expenses rose 10.9% to $1.1 billion, and research and development expenses climbed 28.1% to $460 million, with the margin decline attributed to growth investments and inflation. The updated guidance implies year-over-year growth of 17.6% at the midpoint, and GE expects 2026 top-line and margin performance to benefit from higher LEAP engine deliveries, with high-teens growth in LEAP deliveries expected this year, along with strong aftermarket services demand and operational execution. Among peers, Textron's second-quarter cost of sales rose 4.2% to $3.09 billion and its gross profit margin declined 100 basis points to 17.8% on reduced margin in the Bell segment, while RTX Corporation's total costs and expenses increased 12.8% to $22 billion yet its adjusted operating profit margin expanded 150 basis points to 11.4%.

Pratt & Whitney Canada, an RTX business, has signed a four-year maintenance, repair, and overhaul agreement with Malaysia's AirBorneo Airways covering the PW127M engines powering its ATR 72-500 regional turboprop fleet through 2030. AirBorneo uses its ATR 72-500 aircraft to support the Rural Air Services network, providing regional air connectivity to remote communities across East Malaysia. Engine maintenance work under the agreement will be centered at Pratt & Whitney Canada's facility in Singapore, following recent infrastructure investments designed to expand the site's turboprop MRO capacity across the Asia-Pacific region. Pratt & Whitney Canada's PW100/PW127 engine family has accumulated over 200 million flight hours across more than 40 years of regional turboprop operations globally.

S&P 500 earnings for the third quarter are expected to rise 23.9% from a year earlier on 11.4% higher revenues, according to Zacks Investment Research, with 14 of 16 Zacks sectors posting positive earnings growth and 6 sectors producing double-digit growth. The double-digit gainers are Aerospace at 159.5%, Energy at 111.8%, Tech at 41.9%, Basic Materials at 29.8%, Transportation at 14.9% and Industrial Products at 13.0%. Excluding the Tech sector, Q3 earnings for the rest of the index would be up 14.3%; excluding Energy, aggregate growth would fall to 19.9%; excluding both Tech and Energy, the rest of the S&P 500 would grow 7.4%. Within Tech, excluding Nvidia, Micron and Alphabet, Q3 earnings for the rest of the sector would be 20.5% versus 41.9% otherwise, while the Zacks Semiconductor industry is expected to post 85.4% earnings growth on 62.8% revenue growth. Since the start of Q3, Energy has seen the largest upgrade to its earnings outlook on elevated oil prices tied to the Persian Gulf situation, with Aerospace, Industrial Products, Tech, Autos, Transportation, Finance and Utilities also enjoying positive revisions.

Qantas, Australia's largest airline, announced on the 23rd that it will launch direct flights linking Sydney, the country's largest city, with New York on the US East Coast in mid-2028. The direct route will be its second ultra-long-haul service, following the planned Sydney–London direct flight scheduled to begin in October 2027. Qantas currently connects Sydney and New York via Auckland, New Zealand. The new direct service will use Airbus A350-1000ULR aircraft fitted with additional fuel tanks, covering just over 16,000 kilometers in about 18 hours, cutting more than three hours off the connecting route. Ticket sales will begin in August 2027.

RTX CEO Chris Calio highlighted the company's record $289 billion backlog, or remaining performance obligations, at the Morgan Stanley 14th Annual Laguna Conference last week, pointing to potential growth toward a Wall Street consensus of $460.5 billion by the end of 2028. Calio said the $289 billion RPO at the end of the second quarter does not include the recently awarded $22.9 billion seven-year Tomahawk cruise missile order or the five framework agreements RTX made with the Department of Defense in February, of which he said volumes will rise anywhere from 2 to 4x. The current RPO is split between $170 billion in commercial aerospace and $119 billion in defense, with only 25% set to be recognized in the next 12 months, and Calio noted that approximately 45% of the RPO relates to long-term commercial aerospace maintenance contracts at Pratt & Whitney expected to be realized over a span of up to 20 years. Calio also cited strength in orders across commercial aerospace original equipment, commercial aerospace aftermarket, and defense, noting that Boeing and Airbus have a 15,000 aircraft backlog to execute on and that demand for integrated air and missile defense is top of mind for every country around the world.

Boeing and Korean Air finalized an order for 103 aircraft worth $36.2 billion at list prices, comprising 20 777-9s, 25 787-10s, 50 737-10s and eight 777-8 freighters. Reuters reported the aircraft will support Korean Air's fleet expansion following its integration of Asiana Airlines, with about 80% expected to replace existing aircraft, while IBA estimates the order's actual value at about $12.6 billion after typical discounts. The deal adds to a Boeing commercial backlog that already exceeded 6,200 aircraft worth $596.7 billion as of June 30, up from $567.3 billion at the end of 2025, and adds another 50 737-10s to a 737 pipeline that already exceeds 4,000 aircraft and extends into the 2030s. Execution remains the bigger risk: Reuters reported Boeing is taking longer than expected to stabilize 737 MAX production at 47 aircraft per month because of wing-supply problems, while 787 production remains at eight per month rather than the targeted 10, and Boeing cut its 2026 free-cash-flow expectation to about $2 billion from $3 billion against roughly $26 billion of net debt. August deliveries also fell to 51 aircraft from 57 a year earlier.

U.S. Trade Representative Greer said on the 21st that China is making progress toward fulfilling the plan it announced in May to purchase 200 Boeing aircraft. Speaking to Fox News, Greer said that of China's Boeing orders, "about 140 are proceeding smoothly. Order procedures are also moving forward for roughly 10 more." He did not say, however, whether China would place additional Boeing orders ahead of the meeting scheduled for the 24th between U.S. President Trump and Chinese President Xi Jinping. China's Commerce Ministry announced in May that it would buy 200 Boeing jets, the first time the Chinese government had officially confirmed a Boeing order. Trump later said the number of Boeing aircraft purchased could reach as many as 750.

GE Aerospace announced it is acquiring private precision-manufacturing company Consolidated Precision Products for about $11.7 billion, a deal that values the target at roughly 26 times EBITDA. Consolidated Precision Products is one of four major component manufacturers in the industry, building jet turbine blades and airfoils, and has worked with GE for more than 15 years as perhaps its third-largest supplier in that group. Management claims the deal will be accretive to earnings per share in year one, funded with about $7 billion in cash from the balance sheet plus new debt, though the transaction is expected to lever up the balance sheet. The move is a vertical-integration play that should give GE priority on procurement and faster ramp-up on new engine designs, and it sent shares of rival supplier Howmet down 7% to 8% on the news. The podcast also discussed Boston Scientific's disclosure that a cyberattack will prevent it from meeting quarterly and annual sales targets, and a mailbag question on reverse stock splits.

Japan Airlines reported in its consolidated results for the first quarter of the fiscal year ending March 2027 that net profit fell 80.2% year on year to 5.3 billion yen. Revenue rose 11.2% to 523.7 billion yen, but aviation fuel costs climbed 58.4% from 94 billion yen to 148.8 billion yen amid heightened tensions in the Middle East, dragging profit before financial and corporate income taxes down 72.1% to 12.7 billion yen. The full-service carrier business, the group's biggest earner with a full-year segment EBIT plan of 104 billion yen, posted a loss of 800 million yen in the quarter, swinging from a profit of 30.7 billion yen a year earlier. Meanwhile, EBIT in the miles, finance and commerce business grew 17.6% to 12 billion yen, helping underpin the group's overall profitability. The company left its full-year earnings forecast and its dividend forecast of 96 yen per share unchanged, with September 30 set as the next record date for shareholder benefits.

General Electric's GE Vernova unit has resolved its legal dispute with Vineyard Wind, while GE Aerospace has addressed a GE9X engine durability issue and announced an US$11.75 billion acquisition of Consolidated Precision Products to bolster precision-cast engine component supplies. The Vineyard Wind settlement trims legal overhang at GE Vernova, and the planned US$11.75 billion CPP acquisition directly targets one of GE Aerospace's largest current vulnerabilities, precision component availability, by bringing more casting capacity in house to support engine production schedules and protect margins around key catalysts such as the GE9X and GEnx ramp. General Electric's narrative projects $63.2 billion revenue and $11.7 billion earnings by 2029, requiring 7.7% yearly revenue growth and about a $2.7 billion earnings increase from $9.0 billion today, and the narrative yields a $404.90 fair value, a 29% upside to its current price. Some of the lowest ranked analysts assume revenue of about US$60.8 billion and earnings of roughly US$10.8 billion by 2029 while applying a lower price target. Investors still need to weigh the unresolved execution risk around GE9X and broader supply chain pressures.

S&P 500 earnings are expected to increase by +24% from the same period last year in the third quarter, the 8th straight quarter of double-digit earnings growth for the index, according to Zacks Investment Research. Earnings are expected to be above the year-earlier level for 14 of the 16 Zacks sectors, with 5 sectors expected to enjoy double-digit growth: Aerospace up +159.3%, Energy up +111.9%, Tech up +41.9%, Basic Materials up +31.2%, and Transportation up +15.1%. The Conglomerates sector is the only one expected to have lower earnings in Q3 relative to the same period last year, down 35.4%, while Consumer Staples earnings are expected to be flat. Excluding the Energy sector, Q3 earnings growth for the S&P 500 drops to +20% from +24%, and excluding the Tech sector, growth for the rest of the index drops to +14.4%. Nvidia's Q3 earnings are expected to increase +90% year-over-year on +91.2% higher revenues, while Micron's year-over-year earnings and revenue growth rates are expected to be +938% and +348.6%, respectively, and Tech sector earnings growth gets cut by slightly more than half once contributions from Nvidia and Micron are excluded. The Q3 earnings season will get the spotlight when the big banks report on October 13th, but the reporting cycle actually got underway with the September 10th quarterly releases from Oracle and Adobe, followed by homebuilder Lennar as the third S&P 500 member to report such Q3 results, with an additional six index members on deck this week including Costco, AutoZone and Darden. Total Q3 earnings for the three S&P 500 members that have reported results already are up +22.6% from the same period last year on +14.9% higher revenues, with 33.3% beating EPS estimates and 66.7% besting revenue estimates.

GE Aerospace said a durability issue found in the GE9X engine is not expected to affect the planned entry into service of Boeing's 777X aircraft next year, according to comments made Thursday at a Morgan Stanley conference. The problem centers on the engine's mid-seal, a component linking the front and rear sections of the GE9X, where testing showed the original design did not meet durability expectations. Engines fitted with a redesigned seal began shipping to Boeing during the third quarter, and Federal Aviation Administration certification is anticipated within the next few months. GE Aerospace first disclosed the potential problem in February and later said it had identified the root cause and completed a corrective design without changing the overall timeline for the GE9X program. Separately, the company said its recently agreed $11.75 billion acquisition of Consolidated Precision Products is intended to strengthen supplies of precision-cast engine components and should not be viewed as a broader shift toward vertical integration across its aerospace operations.