Q1 2026 General Electric Co Earnings Call

April 21, 2026

Speaker #1: Good day, ladies and gentlemen, and welcome to the GE Aerospace First Quarter 2026 earnings conference call. At this time, all participants are in a listen-only mode.

Operator: Good day, ladies and gentlemen, and welcome to the GE Aerospace Q1 2026 Earnings Conference Call. At this time, all participants are in a listen-only mode. My name is Liz, and I will be your conference coordinator today. If you experience issues with the webcast slides refreshing, or there appears to be delays in the slide advancement, please hit F5 on your keyboard to refresh. As a reminder, this conference is being recorded. I would now like to turn the program over to your host for today's conference, Blaire Shoor from the GE Aerospace Investor Relations team. Please proceed.

Speaker #1: My name is Liz, and I will be your conference coordinator today. If you experience issues with the webcast slides refreshing or if there appear to be delays in the slide advancement, please hit F5 on your keyboard to refresh.

Speaker #1: As a reminder, this conference is being recorded. I would now like to turn the program over to your host for today's conference, Blair Shore from the GE Aerospace Investor Relations team.

Speaker #1: Please proceed.

Speaker #2: Thanks, Liz. Welcome to GE Aerospace's first quarter 2026 earnings call. I'm joined by Chairman and CEO Larry Kolb, and CFO Rahul Gai. Many of the statements we're making are forward-looking and based on our best view of the world and our business as we see them today.

Blaire Shoor: Thanks, Liz. Welcome to GE Aerospace's Q1 2026 Earnings Call. I'm joined by Chairman and CEO, Larry Culp, and CFO, Rahul Ghai. Many of the statements we're making are forward-looking and based on our best view of the world and our business as we see them today. As described in our SEC filings and website, those elements may change as the world changes. Additionally, Larry and Rahul will speak to total company and corporate financial results and guidance today on a non-GAAP basis. Now, over to Larry.

Speaker #2: As described in our SEC filings and on our website, those elements may change as the world changes. Additionally, Larry and Rahul will speak to total company and corporate financial results and guidance today on a non-GAAP basis.

Speaker #2: Now, over to Larry.

Speaker #3: Thanks, Blair. Good morning, everyone. I want to start by addressing the conflict in the Middle East and the dynamic geopolitical environment our industry is navigating.

Larry Culp: Thanks, Blaire. Good morning, everyone. I want to start by addressing the conflict in the Middle East and the dynamic geopolitical environment our industry is navigating. While we're hopeful for a peaceful resolution, we're also embracing today's reality. With safety our top priority, we're focused every day on supporting our teams in the region and our customers globally. At GE Aerospace, we remain committed to our purpose. We invent the future of flight, lift people up, and bring them home safely. Right now, nearly 1 million people are in flight with our technology under wing, a responsibility our 57,000 employees take seriously. Turning to our Q1 results, 2026 is off to a strong start. Orders were up 87%, with CES nearly doubling and DPT up 67%, including record defense orders for this decade. Revenue increased 29%, driven by CES services and double-digit growth in DPT.

Speaker #3: While we're hopeful for a peaceful resolution, we're also embracing today's reality. With safety our top priority, we're focused every day on supporting our teams in the region and our customers globally.

Speaker #3: At GE Aerospace, we remain committed to our purpose. We invent the future of flight, lift people up, and bring them home safely. Right now, nearly 1 million people are in flight with our technology under wing, a responsibility our 57,000 employees take seriously.

Speaker #3: Turning to our first quarter results, 2026 is off to a strong start. Orders were up 87%, with CES nearly doubling and DPT up 67%, including record defense orders for this decade.

Speaker #3: Revenue increased 29%, driven by CES services, and double-digit growth in DPT. Operating profit grew 18%, with both segments up double digits. EPS increased 25% to $1.86, with free cash flow up 14%.

Larry Culp: Operating profit grew 18%, with both segments up double digits. EPS increased 25% to $1.86, with free cash flow up 14%. Flight Deck enabled us to improve output again, with commercial services revenue up 39% and total engine deliveries up 43%. All the while, we're continuously investing to improve time on wing and lower cost of ownership for our customers across our current fleet and for next-generation technologies. I want to express a big thank you to both the GE Aerospace team and our supplier partners for their unwavering commitment to deliver for our customers. Turning to slide four and what we're currently seeing in today's operating environment. In Q1, global departures were up low single digits, including a high single-digit decline in the Middle East, which represents roughly 5% of our departures.

Speaker #3: Flight Deck enabled us to improve output again, with commercial services revenue up 39% and total engine deliveries up 43%. All the while, we're continuously investing to improve time on wing and lower cost of ownership for our customers across our current fleet and for next-generation technologies.

Speaker #3: I want to express a big thank you to both the GE Aerospace team and our supplier partners for their unwavering commitment to deliver for our customers.

Speaker #3: Turning to slide four, and what we're currently seeing in today's operating environment. In the first quarter, global departures were up low single digits, including a high single-digit decline in the Middle East, which represents roughly 5% of our departures.

Speaker #3: And for the balance of the year, we've assessed multiple scenarios to develop a range of outcomes, with our current assumption that the conflict and its effects continue through the summer.

Larry Culp: For the balance of the year, we've assessed multiple scenarios to develop a range of outcomes, with our current assumption that the conflict and its effects continue through the summer. As a result, we're reducing our full-year departures outlook from mid-single-digit growth to flat to low single-digit growth. This includes a low double-digit decline in the Middle East for the year, with modest reductions to other regions. Based on our experience during the global financial crisis, the impact to services will likely lag changes in air traffic demand by several quarters, to be followed by a period of above-average growth. We're well-positioned to navigate cycles, with our backlog providing resilience through changes in air traffic. We have a young and diverse fleet with leading programs in both narrow body and wide body.

Speaker #3: As a result, we're reducing our full-year departures outlook from mid-single-digit growth to flat to low-single-digit growth. This includes a low double-digit decline in the Middle East for the year, with modest reductions to other regions.

Speaker #3: Based on our experience during the global financial crisis, the impact of services will likely lag changes in air traffic demand by several quarters, to be followed by a period of above-average growth.

Speaker #3: We're well positioned to navigate cycles, with our backlog providing resilience through changes in air traffic. And we have a young and diverse fleet, with leading programs in both narrow-body and wide-body.

Speaker #3: For our largest program, the CFM56, about two-thirds of the fleet is yet to undergo a second shop visit, and utilization remains stable, supporting continued demand.

Larry Culp: For our largest program, the CFM56, about two-thirds of the fleet is yet to undergo a second shop visit, and utilization remains stable, supporting continued demand. Additionally, our defense business is supporting US and allied warfighters, with our engines powering the Black Hawk, the Apache, the B-1, the B-2, the F-15EX, the F-16, and the Eurofighter. We're seeing increased utilization since March, creating future aftermarket demand. Diving deeper into services orders and backlog. Our commercial services business is supported by a robust backlog of over $170 billion, up nearly $30 billion since the end of 2024, providing visibility into multi-year demand and supporting our continued growth. Over the last 12 months, commercial services orders increased over 30%, including 49% growth in Q1. Within services, demand remains strong for spare parts, which represent roughly 40% of services revenue.

Speaker #3: Additionally, our defense business is supporting U.S. and allied warfighters, with our engines powering the Black Hawk, the Apache, the B-1, the B-2, the F-15EX, the F-16, and the Eurofighter.

Speaker #3: We're seeing increased utilization since March, creating future aftermarket demand. Diving deeper into services and service orders and backlog. Our commercial services business is supported by a robust backlog, up nearly $30 billion since the end of '24.

Speaker #3: Providing visibility into multi-year demand and supporting our continued growth. Over the last 12 months, commercial services orders increased over 30%, including 49% growth in the first quarter.

Speaker #3: Within services, demand remains strong for spare parts, which represent roughly 40% of services revenue. Since the beginning of March, spare parts orders are up over 30% year over year, and are sequentially flat compared to the first two months of the first quarter.

Larry Culp: Since the beginning of March, spare parts orders are up over 30% year-over-year, and sequentially flat to the first two months of the Q1. Even with over 25% revenue growth over the last five quarters, demand continues to exceed supply. As a result, spare parts delinquency, which represents shipments that have been delayed due to material availability constraints, is up roughly 70% since the end of 2024. Given the sustained demand environment and our existing delinquency, we're entering the Q2 with more than 95% of spare parts revenue already in backlog. Turning to internal shop visits, which represent roughly 60% of our services revenue. Approximately two-thirds of the engines due for our projected shop visits for all of 2026 are currently off wing, either in our shops or waiting to be inducted.

Speaker #3: And even with over 25% revenue growth over the last five quarters, demand continues to exceed supply. As a result, spare parts delinquency—which represents shipments that have been delayed due to material availability constraints—is up roughly 70% since the end of '24.

Speaker #3: Given the sustained demand environment and our existing delinquency, we're entering the second quarter with more than 95% of spare parts revenue already in backlog.

Speaker #3: Turning to internal shop visits, which represent roughly 60% of our services revenue, approximately two-thirds of the engines due for our projected shop visits for all of '26 are currently off wing, either in our shops or waiting to be inducted.

Speaker #3: Additionally, we have high visibility into the engines, which will come off wing over the next couple of quarters based on utilization trends, and will require removal thresholds in concert with the airlines.

Larry Culp: Additionally, we have high visibility into the engines, which will come off wing over the next couple of quarters based on utilization trends and required removal thresholds in concert with the airlines. Our pipeline of planned engine removals in Q2 and Q3, combined with engines that are currently off wing, exceeds our shop visit guide, providing ample demand to fulfill our outlook and de-risking our 2026 guide. Overall, we expect a limited impact on services revenue and profit in 2026. We're holding our full year guidance across the board given the macro uncertainty, though, with our strong start to the year, we are trending toward the high end of that range. Shifting to Slide 6. Flight Deck is fundamentally changing the way we operate, and in times like these, it matters even more. Collaborative problem-solving with suppliers, airframers, airlines, and lessors are key to this effort.

Speaker #3: Our pipeline of planned engine removals in the second and third quarters, combined with engines that are currently off wing, exceeds our shop visit guide, providing ample demand to fulfill our outlook and de-risking our 2026 guide.

Speaker #3: Overall, we expect a limited impact on services revenue and profit in '26. We're holding our full-year guidance across the board given the macro uncertainty, though with our strong start to the year, we are trending toward the high end of that range.

Speaker #3: Shifting to slide six. Flight Deck is fundamentally changing the way we operate, and in times like these, it matters even more. Collaborative problem-solving with suppliers, airframers, airlines, and lessors are key to this effort.

Speaker #3: For example, we recently hosted a key supplier at our Terre Haute, Indiana site. Leveraging Flight Deck, we worked together to improve flow and reduce waste on their LEAP production line.

Larry Culp: For example, we recently hosted a key supplier at our Terre Haute, Indiana site. Leveraging Flight Deck, we worked together to improve flow and reduce waste on their LEAP production line, and they've since increased output by over 40%. Actions like these contributed to priority supplier material input, increasing double digits both sequentially and year over year again in Q1, resulting in the increased outputs I mentioned a moment ago, including engines up 43%. Across our MRO network, we're using Flight Deck to increase output, reduce turnaround times, and lower the cost of shop visits. Take our McAllen, Texas site, where we reduced LEAP high pressure turbine repair time by over 50% by redesigning the cell for better flow. We know AI will be an accelerator for Flight Deck.

Speaker #3: And they've since increased output by over 40%. Actions like these contributed to priority supplier material input increasing double digits both sequentially and year over year again in the first quarter, resulting in the increased outputs I mentioned ago, including engines up 43%.

Speaker #3: Across our MRO network, we're using Flight Deck to increase output, reduce turnaround times, and lower the cost of shop visits. Take our McAllen, Texas site, where we reduced LEAP high-pressure turbine repair time by over 50% by redesigning the cell for better flow.

Speaker #3: And we know AI will be an accelerator for flight deck. At our Lafayette, Indiana facility, we expanded the deployment of an AI-based material assistant to predict shop visit work scopes for LEAP engines nine months in advance.

Larry Culp: At our Lafayette, Indiana facility, we expanded the deployment of an AI-based material assistant to predict shop visit work scopes for LEAP engines 9 months in advance, building on the turnaround time reduction we've recognized in both our Selma and Malaysia sites. Collectively, our efforts improved shop visit turnaround times for both narrow body and wide body platforms year-over-year. With our growing installed base, we're focused on expanding capacity to fulfill customer demand. Within the LEAP external network, Delta TechOps is now the first North American airline MRO provider licensed for both the LEAP-1A and LEAP-1B. We just announced Iberia as our seventh premier MRO, supporting growth in Europe. More broadly, maintaining US aerospace leadership requires sustained investment to meet customer demand.

Speaker #3: Building on the turnaround time reduction we've recognized in both our Selma and Malaysia sites, collectively, our efforts improved shop visit turnaround times for both narrowbody and wide-body platforms year over year.

Speaker #3: With our growing installed base, we're focused on expanding capacity to fulfill customer demand. Within the LEAP external network, Delta TechOps is now the first North American airline MRO provider licensed for both the LEAP-1A and LEAP-1B.

Speaker #3: And we just announced Iberia as our seventh premier MRO, supporting growth in Europe. More broadly, maintaining U.S. aerospace leadership requires sustained investment to meet customer demand.

Speaker #3: We recently announced plans to invest $1 billion in our U.S. manufacturing sites and supply base for the second consecutive year, to help accelerate engine deliveries, ramp part production that extends time on wing, and strengthen our defense industrial base.

Larry Culp: We recently announced plans to invest $1 billion in our US manufacturing sites and supply base for the second consecutive year to help accelerate engine deliveries, ramp part production that extends time on wing, and strengthen our defense industrial base. Additionally, $100 million will be invested in our external supplier base to provide equipment and tooling to increase capacity. These actions and investments are driving meaningful progress to increase services and equipment output. While there's more to do, we're off to a strong start and positioned to ramp even further. Shifting to slide seven. Our growing backlog reflects our commitment to deliver customer value. We're investing to improve time on wing and cost of ownership. Nearly $200 million of our $1 billion investment in US manufacturing supports expanding capacity for LEAP durability upgrades.

Speaker #3: Additionally, $100 million will be invested in our external supplier base to provide equipment and tooling to increase capacity. These actions and investments are driving meaningful progress to increase services and equipment output.

Speaker #3: And while there's more to do, we're off to a strong start and in position to ramp even further. Shifting to slide seven—our growing backlog reflects our commitment to deliver customer value.

Speaker #3: We're investing to improve time on wing and cost of ownership. Nearly $200 million of our $1 billion investment in U.S. manufacturing supports expanding capacity for LEAP durability upgrades.

Speaker #3: And we're making progress upgrading the fleet with the durability kit, now on over 30% of the LEAP-1A installed base. Growing our repair capability is critical to improve turnaround times and lower cost of ownership, as a repaired part can cost 50% less than a new part.

Larry Culp: We're making progress upgrading this fleet with durability kit now on over 30% of the LEAP-1A installed base. Growing our repair capability is critical to improve turnaround times and lower cost of ownership, as a repaired part can cost 50% less than a new part. At our Singapore repair facility, we're investing $300 million to support new technologies and repair processes. Our customer-driven approach is driving backlog growth with more than 650 commercial engine, or over $1 billion in wins in the first quarter alone. This included extending our 50+ year partnership with American as they celebrate their 100th anniversary this month. American recently committed to more than 300 LEAP-1A engines with options for 200 more to power future A321neo and A321XLR deliveries. United, also celebrating 100 years this month, selected 300 GEnx engines for its 787 fleet, making it the largest GEnx operator globally.

Speaker #3: At our Singapore repair facility, we're investing $300 million to support new technologies and repair processes. Our customer-driven approach is driving backlog growth with more than 650 commercial engine, or over $1 billion in wins in the first quarter alone.

Speaker #3: This included extending our 50-plus-year partnership with American as they celebrate their 100th anniversary this month. American recently committed to more than 300 LEAP-1A engines, with options for 200 more, to power future A321neo and A321XLR deliveries.

Speaker #3: United, also celebrating 100 years this month, selected 300 GE NX engines for its 787 fleet, making it the largest GE NX operator globally. Additionally, Delta committed to 60 GE NX engines, with options for 60 more for its new 787 fleet, marking its first GE NX selection.

Larry Culp: Additionally, Delta committed to 60 GEnx engines with options for 60 more for its new 787 fleet, marking its first GEnx selection. In services, we signed an agreement with Ryanair covering approximately 2,000 CFM56 and LEAP engines, providing material support and MRO services to scale their in-house capabilities, consistent with our open MRO strategy. In Defense, in support of the CH-53K and the critical missions it performs for the US Marine Corps, we were awarded a $1.4 billion contract for additional T408 turboshaft engines. With continued momentum, we're looking forward to what should be an exciting Farnborough Airshow in July. Our experience with our current fleet is also informing next-generation technology investment. RISE is central to that strategy and will enable improved efficiency without sacrificing durability.

Speaker #3: In Services, we signed an agreement with Ryanair, covering approximately 2,000 CFM56 and LEAP engines, providing material support and MRO services to scale their in-house capabilities.

Speaker #3: Consistent with our open MRO strategy, and in Defense, in support of the CH-53K and the critical missions it performs for the U.S. Marine Corps, we were awarded a $1.4 billion contract for additional T408 turboshaft engines.

Speaker #3: With continued momentum, we're looking forward to what should be an exciting Farnborough Airshow in July. Our experience with our current fleet is also informing next-generation technology investment.

Speaker #3: RISE is central to that strategy and will enable improved efficiency without sacrificing durability. This quarter, together with the Civil Aviation Authority of Singapore and Airbus, we established the world's first airport test bed for open-fan technology as part of the RISE program.

Larry Culp: This quarter, together with the Civil Aviation Authority of Singapore and Airbus, we established the world's first airport test bed for open fan technology as a part of the RISE program. This testing will validate how next-gen engine architectures operate in real-world airline environments and marks another step forward toward ground and flight tests later this decade. In Defense and Systems, we also continue to execute with speed against high-priority military needs in support of US and allied war fighters. This quarter, deliveries were up 24%, and we continue to receive awards across our family of small engines, a key growth area as programs progress. This included an award from the US Air Force to complete an initial design concept of the GEK1500 in partnership with Kratos, with potential applications across unmanned aerial systems, collaborative combat aircraft, or CCAs, and missiles.

Speaker #3: This testing will validate how next-gen engine architectures operate in real-world airline environments and marks another step forward toward ground and flight tests later this decade.

Speaker #3: In Defense and Systems, we also continue to execute with speed against high-priority military needs in support of U.S. and allied warfighters. This quarter, deliveries were up 24%, and we continue to receive awards across our family of small engines—a key growth area as programs progress.

Speaker #3: This included an award from the U.S. Air Force to complete an initial design concept of the GE K1500 in partnership with Kratos, with potential applications across unmanned aerial systems, collaborative combat aircraft, or CCAs, and missiles.

Speaker #3: This work is being informed by the maturity of the GE K800, which completed successful altitude testing last fall. The team designed, built, and tested the first GE K800 in less than 12 months, testing the fifth iteration of the engine last summer.

Larry Culp: This work is being informed by the maturity of the GEK800, which completed successful altitude testing last fall. The team designed, built, and tested the first GEK800 in less than 12 months, testing the fifth iteration of the engine last summer. We're making progress with high-end CCAs through our partnership with Shield AI for the X-BAT vehicle program, pairing our propulsion development, testing, and certification expertise with their autonomous aircraft capabilities to accelerate delivery of mission-ready capabilities. We also recently completed a preliminary design review on the hybrid electric turbo generator engine system for BETA Technologies' Alia-250 VTOL autonomous aircraft. This confirms the engine concept and demonstrates the power of combining our technical expertise, accelerating key programs. Stepping back, we're driving measurable progress on what matters most to our customers, ramping output and improving durability while reducing the cost of ownership, which supports their growth and ours.

Speaker #3: And we're making progress with high-end CCAs through our partnership with Shield AI for the Expat vehicle program, pairing our propulsion development, testing, and certification expertise with their autonomous aircraft capabilities to accelerate delivery of mission-ready capabilities.

Speaker #3: We also recently completed a preliminary design review on the hybrid electric turbogenerator engine system for Beta Technologies' MB250 VTOL autonomous aircraft. This confirms the engine concept and demonstrates the power of combining our technical expertise, accelerating key programs.

Speaker #3: Stepping back, we're driving measurable progress on what matters most to our customers: ramping output and improving durability while reducing the cost of ownership, which supports their growth and ours.

Speaker #3: Rahul, over to you.

Larry Culp: Rahul, over to you.

Speaker #2: All right. Thank you, and good morning, everyone. We started the year with over 20% top-line and earnings growth. Orders were up 87%, with CES up 93% and TPT up 67%.

Rahul Ghai: Right. Thank you, and good morning, everyone. We started the year with over 20% top line and earnings growth. Orders were up 87%, with CES up 93% and DPT up 67%. Revenue increased 29%, with CES up 34%, while DPT was up 19%. Operating profit was $2.5 billion, up approximately $380 million, driven by services volume and price. Margins, as expected, decreased 200 basis points to 21.8% from the impact of installed engine growth, investments, and inflation. EPS was $1.86, up 25% from increased operating profit, a lower tax rate, and a reduced share count. Free cash flow was $1.7 billion, up 14%, largely driven by higher earnings. Working capital and AD&A combined was nearly a $500 million source with strong utilization billings, partially offset by the expected timing of compensation payments. Going deeper on our 25% EPS growth this quarter.

Speaker #2: Revenue increased 29%, with CES up 34%, while DPT was up 19%. Operating profit was $2.5 billion, up approximately $380 million, driven by services volume and price.

Speaker #2: Margins, as expected, decreased 200 basis points to 21.8% from the impact of install engine growth, investments, and inflation. EPS was $1.86, up 25% from increased operating profit, a lower tax rate, and a reduced share count.

Speaker #2: Free cash flow was $1.7 billion, up 14%, largely driven by higher earnings. Working capital and ADNA combined was nearly a $500 million source, with strong utilization billings.

Speaker #2: Partially offset by the expected timing of compensation payments. Going deeper on our 25% EPS growth this quarter, growth in operating profit drove $0.29, or nearly 80% of the improvement in EPS.

Rahul Ghai: Growth in operating profit drove $0.29, or nearly 80% of the improvement in EPS, with increased profit in CES and DPT. This was partially offset by higher corporate costs and eliminations, which were up around $120 million, roughly half from an increase in eliminations and half from an increase in environmental, health, and safety expenses off a low base. A lower tax rate and reduction in share count drove an additional $0.10 of EPS growth. Tax rates decreased three points to 14.7% from earnings mix and benefit from recent tax legislation. Share count was down 24 million from our previously announced capital allocation actions. Turning to CES. In Q1, orders grew 93%, with services up 49% and equipment more than tripling to nearly $8 billion. Revenue increased 34%.

Speaker #2: With increased profit in CES and DPT, this was partially offset by higher corporate cost and eliminations, which were up around $120 million. Roughly half was from an increase in eliminations and half from an increase in environmental, health, and safety expenses, off a low base.

Speaker #2: A lower tax rate and reduction in share count drove an additional $0.10 of EPS growth. Tax rate decreased 3 points to 14.7%, from earnings mix and benefit from recent tax legislation.

Speaker #2: Share count was down 24 million from our previously announced capital allocation actions. Turning to CES, in the first quarter, orders grew 93%, with services up 49% and equipment more than tripling to nearly $8 billion.

Speaker #2: Revenue increased 34%. Services grew 39%, with internal shop visit revenue up 35% from higher volume, including LEAP internal shop visit growth of over 50% and increased work scopes.

Rahul Ghai: Services grew 39%, with internal shop visit revenue up 35% from higher volume, including LEAP internal shop visit growth of over 50% and increased work scopes. Spare parts sales were also up over 25% from improved material availability and growth of external LEAP shop visits. Equipment revenue grew 20%, with engine deliveries up 50%, including LEAP up 63%. Wide body deliveries were also up over 25%, driven by GEnx, which was up even more. Profit was $2.4 billion, up nearly $450 million from higher services, volume, price, and the absence of charges related to estimated profitability on long-term service agreements taken in Q1 2025. As expected, margins were down 230 basis points to 26.4%, driven by installed engine growth, including nine GE9X shipments and investments. Both installed engine and spare engine volume increased year-over-year, but growth in installs outpaced spare engine growth.

Speaker #2: Spare parts sales were also up over 25%, from improved material availability and growth of external LEAP shop visits. Equipment revenue grew 20%, with engine deliveries up 50%, including LEAP up 63%. Widebody deliveries were also up over 25%, driven by GE9X, which was up even more.

Speaker #2: Profit was $2.4 billion, up nearly $450 million, from higher services volume, price, and the absence of charges related to estimated profitability on long-term service agreements taken in the first quarter of 2025.

Speaker #2: As expected, margins were down 230 basis points to 26.4%, driven by install engine growth, including 9X shipments and investments. Both install engine and spare engine volume increased year over year, with growth in installs outpacing spare engine growth.

Speaker #2: Overall, CES continues to deliver meaningful growth, largely driven by services as OE ramps. In DPT, orders increased 67%, including T408 engines for the U.S. Marine Corps CH-53K.

Rahul Ghai: Overall, CES continues to deliver meaningful growth, largely driven by services as OE ramps. In DPT, orders increased 67%, including T408 engines for US Marine Corps CH-53K. Defense book-to-bill was above two for the second consecutive quarter. Revenue grew 19%. Defense and systems revenue was up 14% as units grew 24%, driven by an increase in F110 and rotorcraft engines. Propulsion and active technologies grew 29%, with growth across the portfolio led by Avio Aero. Profit grew 17% from increased volume and price. Margins were down 20 basis points to 11.8%, driven by mix, investments, and inflation. DPT delivered a solid Q1, with continued demand strength and improved output. Moving to guidance on Slide 12. Our Q1 exceeded expectations, given stronger spare parts sales growth and shop visits increase.

Speaker #2: Defense book-to-bill was above 2 for the second consecutive quarter. Revenue grew 19%. Defense and Systems revenue was up 14% as units grew 24%, driven by an increase in F110 and rotorcraft engines.

Speaker #2: Propulsion and Adaptive Technologies grew 29%, with growth across the portfolio led by Avio Aero. Profit grew 17% from increased volume and price. Margins were down 20 basis points to 11.8%, driven by mix, investments, and inflation.

Speaker #2: DPT delivered a solid first quarter, with continued demand strength and improved output. Moving to guidance on slide 12, our first quarter exceeded expectations. Given stronger spare parts sales growth and increased shop visits, we have a robust backlog supporting our growth for several years.

Rahul Ghai: We have a robust backlog supporting our growth for several years, and we are taking actions to navigate the current environment. Due to the dynamic macroeconomic backdrop, we are maintaining our guidance across the board. As Larry mentioned, given our strong start to the year, we are trending towards the high end of the range of low double-digit revenue growth, profit of $9.85 to $10.25 billion, EPS of $7.10 to $7.40, and free cash flow of $8 to $8.4 billion for total company. We are also maintaining our segment guidance for both CES and DPT with a similar trend towards the higher end. Our guidance is based on full year departures growth of flat to low single digits and is underpinned by the following assumptions. Fuel prices remain elevated above current levels through Q3 and decreasing to current levels by year-end.

Speaker #2: And we are taking actions to navigate the current environment. Due to the dynamic macroeconomic backdrop, we are maintaining our guidance across the board. And, as Larry mentioned, given our strong start to the year, we are trending toward the high end of the range of low double-digit revenue growth, profit of $9.85 to $10.25 billion, EPS of $7.10 to $7.40, and free cash flow of $8 to $8.4 billion for the total company.

Speaker #2: We are also maintaining our segment guidance for both CES and DPT, with a similar trend toward the higher end. Our guidance is based on full-year departures growth of flat to low single digits, and is underpinned by the following assumptions: fuel prices remain elevated above current levels through the third quarter, and decrease to current levels by year-end.

Speaker #2: A near-term impact from fuel availability in certain geographical regions, global reduction in GDP growth impacting air travel demand—this guidance doesn't contemplate a global recession unfolding.

Rahul Ghai: A near-term impact from fuel availability in certain geographical regions. Global reduction in GDP growth impacting air travel demand. This guidance doesn't contemplate a global recession unfolding. Near term, orders continue to be strong, and we expect the strength in Q1 to continue into Q2 with 95% of spare parts in backlog, and all shop visits for the quarter already off wing. As a result, we are expecting Q2 services growth of high teens above our full-year guide and supporting total company year-over-year, and sequential profit growth in the quarter. For full year, we are now expecting services revenue is up roughly $4 billion year-over-year from approximately $3.5 billion expected previously, supporting our increase of profit and cash to high end of the range.

Speaker #2: Near term, orders continue to be strong, and we expect the strength in the first quarter to continue into the second quarter, with 95% of spare parts in backlog.

Speaker #2: And all shop visits for the quarter are already off-weight. As a result, we are expecting second quarter services growth in the high teens, above our full-year guide, and supporting total company year-over-year and sequential profit growth in the quarter.

Speaker #2: For the full year, we now expect services revenue to be up roughly $4 billion year over year, from approximately $3.5 billion expected previously. This is supporting our increase of profit and cash to the high end of the range.

Speaker #2: However, as we get into the second half, we are taking a more measured view, given the evolving environment, and have included the potential impact from deceleration in spare parts growth, lighter work scopes, delayed spare engine shipments, and reduced billings within our guidance.

Rahul Ghai: However, as we get into H2, we are taking a more measured view given the evolving environment, and have included the potential impact from deceleration in spare parts growth, lighter work scopes, delayed spare engine shipments, and reduced billings within our guidance. While the external environment remains uncertain, we are taking proactive actions, including managing discretionary spending and conducting reviews to assess risks and opportunities to support our customers. Overall, balancing the various factors, we are confident in our ability to deliver the high end of our guidance given our strong Q1 outlook for the Q2 and a substantial backlog. With that, Larry, back to you.

Speaker #2: While the external environment remains uncertain, we are taking proactive actions, including managing discretionary spending and conducting reviews to assess risks and opportunities to support our customers.

Speaker #2: Overall, balancing the various factors, we are confident in our ability to deliver the high end of our guidance, given our strong first quarter outlook for the second quarter and a substantial backlog. With that, Larry, back to you.

Speaker #1: Rahul, thanks. Our momentum is further supported by our sustained competitive advantages. With the industry's largest fleet—80,000 engines and growing—and more than 2.3 billion flight hours, we operate at scale with unmatched proximity to our customers across decades-long lifecycles, which makes us the partner of choice.

Larry Culp: Rahul, thanks. Our momentum is further supported by our sustained competitive advantages. With the industry's largest fleet, 80,000 engines and growing, and more than 2.3 billion flight hours, we operate at scale with unmatched proximity to our customers across decades-long life cycles. Which makes us the partner of choice. Our field experience, combined with nearly $3 billion in annual R&D, enables continuous improvement in time on wing and cost of ownership, directly aligned with what our customers value most. Across narrow body, wide body, regional, and defense platforms, we offer leading performance under wing, supported by deep technology expertise and a growing services network. Our world-class engineering teams develop next-gen technology to improve durability, efficiency, and turnaround times, along with advanced defense capabilities. Through Flight Deck, we're turning strategy into results with a focus on safety, quality, delivery, and cost, always in that order, every day.

Speaker #1: Our field experience, combined with nearly $3 billion in annual R&D, enables continuous improvement in time on wing and cost of ownership, directly aligned with what our customers value most.

Speaker #1: Across narrow-body, wide-body, regional, and defense platforms, we offer leading performance under wing, supported by deep technology expertise and a growing services network. Our world-class engineering teams develop next-gen technology to improve durability, efficiency, and turnaround times, along with advanced defense capabilities.

Speaker #1: And through Flight Deck, we're turning strategy into results, with a focus on safety, quality, delivery, and cost—always in that order, every day. With Flight Deck, our over $210 billion backlog and the actions underway, we're well positioned to manage near-term uncertainty and deliver value.

Larry Culp: With Flight Deck, our over $210 billion backlog, and the actions underway, we're well-positioned to manage near-term uncertainty and deliver value. With that, let's go to the questions.

Speaker #1: With that, let's go to the questions.

Speaker #2: Before we open the line, I'd ask everyone in the queue to consider your fellow analysts and ask one question, so we can get to as many people as possible.

Blaire Shoor: Before we open the line, I'd ask everyone in the queue to consider your fellow analysts and ask one question so we can get to as many people as possible. Liz, can you please open the line?

Speaker #2: Liz, can you please open the line?

Speaker #3: Ladies and gentlemen, if you wish to ask a question, please press *11 on your telephone. If you wish to withdraw your question, or if your question has already been answered, please press *11 again.

Operator: Ladies and gentlemen, if you wish to ask a question, please press *11 on your telephone. If you wish to withdraw your question or your question has already been answered, please press *11 again. Our first question comes from David Strauss with Wells Fargo.

Speaker #3: Our first question comes from David Strauss with Wells.

Speaker #1: Fargo

Speaker #2: Thanks. Good morning. Thanks for taking my question.

David Strauss: Thanks. Good morning. Thanks for taking my question.

Speaker #3: Good morning David .

Larry Culp: Good morning, David.

Speaker #2: Thanks the . For the detail on how you're thinking about the aftermarket . But just wanted to want to clarify So , Larry , it sounds like you ultimately do expect an impact on services growth from your from your lower departures growth forecast , but maybe it sounds like you're thinking more so in 27 or carrying into 27 than 26 , given the given your strong Q1 and the backlog that you have on the services side .

David Strauss: Thanks for the detail on how you're thinking about the aftermarket. Just wanted to clarify. Larry, it sounds like you ultimately do expect an impact on services growth from your lower departures growth forecast, but maybe it sounds like you're thinking more so in 2027 or carrying into 2027 than 2026, given your strong Q1 and the backlog that you have on the services side. I guess in terms of how you're thinking this might play out, are you thinking at this point that there could be a pickup in CFM56 or GE90 retirements, or are you just expecting lower utilization to come through at this point? Thanks.

Speaker #2: And I guess in terms of what you're , how you're thinking this might play out , are you thinking at this point that there could be a pickup in in Cfm56 or G90 retirements , or are you just expecting , you know , lower utilization to come through at this point ?

Speaker #2: Thanks

Speaker #3: David . I think that what you see in the the lean toward the high end of the guide is the expectation that we're going to have a strong second quarter , given the visibility that we have , both with spare parts and shop visits .

Larry Culp: David, I think that what you see in the lean toward the high end of the guide is the expectation that we're going to have a strong Q2 given the visibility that we have both with spare parts and shop visits. We touched on that earlier, and I think that's very meaningful. I think what we're acknowledging is it's very hard for any of us to call the duration of what's happening in the Middle East at this point. By holding the guide, I think what we've suggested is that the backlog that we have, the visibility that we do have for H2, should allow us to be within that guide that we offered up 90 days ago. I think we are acknowledging that if there is sustained softness in departures, that there is an effect, typically in the commercial services, but with a lag.

Speaker #3: We've we've touched on that earlier , and I think that's very meaningful . I think what we're acknowledging is , it's very hard for any of us to call the duration of , of what's happening in the Middle East at this point by holding the guide , I think what we've suggested is that the backlog that we have , the visibility that we do have for the second half , should allow us to be within that , that guide that we offered up 90 days ago .

Larry Culp: By holding the guide, I think what we've suggested is that the backlog that we have, the visibility that we do have for H2, should allow us to be within that guide that we offered up 90 days ago. I think we are acknowledging that if there is sustained softness in departures, that there is an effect, typically in the commercial services, but with a lag.

Speaker #3: I think we are acknowledging that if there is sustained softness in departures , that there is an effect typically in the in the commercial services , but a lag .

Speaker #3: Let's hope we're not staring at something akin to that GFC. We mentioned that in our prepared remarks, but there will be a lag effect.

Larry Culp: Let's hope we're not staring at something akin to the GFC, we mentioned that in our prepared remarks, but there will be a lag effect. At this point, I think, given what we know, we feel strongly about our ability to deliver the high end of the guide here in 2026.

Speaker #3: But at this point, I think, given what we know, we feel strongly about our ability to deliver the high end of the guide here in '26.

Speaker #4: Yeah . And David , just to add to that , as we think about 2027 , Larry said , we feel good about 26 .

Rahul Ghai: Yeah. David, just to add to that, as we think about 2027, Larry said we feel good about 2026. Having leading positions in both narrow body and wide body, 75% share of the narrow body cycles, 55% share of the wide body cycles, is helpful in times like this, when the traffic growth is uneven as it dampens the volatility that we see in the market. Also, the fleet is young. You touched on the CFM56 and GE90. A third of the CFM56s have not seen their first shop visit. Two-thirds have not seen a second shop visit. Similar trends for GE90. 70% of the GE90s have not seen the second shop visit. I know it's early days, but as we sit here in April, both the number of parked aircraft and the retirements are really low.

Speaker #4: But you know , having leading positions in both narrowbody and widebody , you know , 75% share of the narrowbody cycles , 55% share of the widebody cycles is helpful in times like this .

Speaker #4: You know , when the traffic growth is uneven as it dampens the volatility that we see in the market . Also , the fleet is young .

Speaker #4: You touched on the CFM56 and G90. You know, a third of the CFM56 have not seen their first shop visits. Two thirds have not seen a second shop visit.

Speaker #4: And similar trends for G90 . You know , 70% of the G90 have not seen the second shop shop visit And we're not , you know , through you know , I know it's early days , but as we sit here in April , both the number of parked aircraft and the retirements are really low .

Speaker #4: In fact, the retirements in the first quarter CFM56 were lower than what we experienced in the fourth quarter. So, we've not seen any increase in either of those two trends.

Rahul Ghai: In fact, the retirements in Q1 for CFM56 were lower than what we experienced in Q4. We've not seen any increase in either of those two trends. As Larry mentioned in his prepared remarks, as we've seen in prior cycles, the air traffic has a strong recovery after every downturn. If we see any impact here in H2 of the year, it is going to be a push-out of demand versus a disruption. Again, it's hard to call 2027 just yet. It all depends on how the situation evolves over the next few months. It is early to call, but overall, we feel good about the trajectory that the business is on through this cycle.

Speaker #4: And as Larry mentioned , you know , as in his prepared remarks , as we've seen in prior cycles , the air traffic has a strong recovery after every downturn .

Speaker #4: So , you know , if you see here delay , you know , if you see any impact here in the second half of the year , it is going to be a push out of of demand versus a disruption .

Speaker #4: So again, it's hard to call '27 just yet. It all depends on how the situation evolves over the next few months.

Speaker #4: But it is early to call. But overall, we feel good about the trajectory that the business is on. You know, through this, through this cycle.

Speaker #1: Our next question comes from Sheila Kahyaoglu with Jefferies.

Operator: Our next question comes from Sheila Kahyaoglu with Jefferies.

Speaker #5: Good morning , guys , and thank you . Maybe just a follow up on David's comments Larry and Raul , you know , services up 39% in Q1 .

Sheila Kahyaoglu: Good morning, guys, and thank you. Maybe just to follow up on David's comments, Larry and Rahul. Services up 39% in Q1, great quarter, both on shop visits and spare parts. Q2 expected to be up high teens, implying only mid to high single digits in H2. Maybe delving a little bit more into visibility you guys have through the summer, and Rahul, you mentioned push out of demand, not demand destruction. I guess, how do we think about where you guys are seeing most potential risk post Q4, whether it's narrow bodies or wide bodies, and how do we think about retirement rates staying low today and potential assumptions for 2026 and 2027?

Speaker #5: Great quarter both on shop visits and spare parts, and Q2 is expected to be up high-teens, implying only mid to high single digits in the second half.

Speaker #5: So maybe delving a little bit more into visibility . You guys have through the summer . And Raul , you mentioned push out of demand , not demand destruction .

Speaker #5: I guess, how do we think about where you guys are seeing most potential risks post-Q4, whether it's narrowbodies or widebodies? And how do we think about retirement rates staying low today, and potential assumptions for '26 and '27?

Speaker #4: Yeah . So I think we touched on a couple of things here You know , as you said , we see good visibility into the second quarter , right .

Rahul Ghai: Yeah. Sheila, I think we touched on a couple of things here. As you said, we see good visibility into Q2, right? Larry and I both said 95% of the spare parts for Q2 are in the backlog. All the engines that we need to work on for Q2 are in the shop. Larry also kind of provided a full year shop visit view here that we are about a third oversubscribed right now from what's already off wing and what will come off wing here in Q2 and Q3. That gives us confidence around 2026 here. Now, as we go into 2027 and where the risks may come, I think you touched on retirement rates. Now, keep in mind that the retirement rates that we've assumed for 2026 for CFM56 are in the 2% range.

Speaker #4: We said, Larry and I both said 95% of the spare parts for the second quarter are in the backlog. All the engines that we need to work on for the second quarter are in the shop.

Speaker #4: And Larry also kind of provided a full-year shop visit view here, that we are about a third oversubscribed right now from what's already off and what will come offering here in the second and third quarter.

Speaker #4: So that gives us confidence around around 2026 . Here now as we go into 2027 and where the risks are may come . I think we touched on , you know , the retirement you touched on retirement rates .

Speaker #4: Now, keep in mind that the retirement rates that we've assumed for 2026 for CFM56 are in the 2% range. And what we saw in the first quarter is sub-1%.

Rahul Ghai: What we saw in Q1 is sub 1%. As we get into 2027, we've already assumed in our prior outlook that retirements increase to 3% to 4%. Just the outlook that we've provided, we've factored in certain increase in retirements. Now we've not seen that. We are not seeing anything concerning just yet. Our order trends are holding, but it is more with what is unknown, and thus a little bit of caution, prudence, whatever words you want to use for H2. I think time will play out and give us more visibility into 2027. Overall, I think the business is strong, franchise is strong, and I think we should be able to navigate anything that evolves here over the next few months.

Speaker #4: And as we get into 2027 , we've already assumed in our prior outlook that increase to 3 to 4% . So we all , you know , just the outlook that we've provided , we've factored in certain increase in retirements .

Speaker #4: Now , we've not seen that . We are not seeing anything concerning just yet . Our order trends are holding , but it is more with what is unknown and thus a little bit of caution , prudence , whatever words you want to use for the second half of the year .

Speaker #4: And I think time will play out and and give us more visibility into 27 . But overall , listen , the business is , is strong , franchise is strong .

Speaker #4: And I think we should be able to navigate anything that comes, you know, that evolves here over the next few months.

Speaker #1: Our next question comes from Ken Herbert with RBC Capital Markets.

Operator: Our next question comes from Kenneth Herbert with RBC Capital Markets.

Speaker #6: Yeah . Hi . Good morning , Larry and Raul really strong . Yeah . Really strong spare parts orders in the first quarter .

Kenneth Herbert: Yeah. Hi, good morning, Larry and Rahul.

Larry Culp: Good morning.

Kenneth Herbert: Yeah, really strong spare parts orders in Q1. I'm just curious, especially your comment on March strengthening from the first two months. Do you get a sense that there was any pre-buying by your customers on the aftermarket ahead of potential disruptions or concerns down the road? I'm just curious as to what was underlying the real strength in orders in the quarter, and if there could have been any pull forward in the order demand. Thank you.

Speaker #6: I'm just curious, especially your comment on March strengthening from the first two months. Do you get a sense that there was any pre-buying by your customers on the aftermarket ahead of potential disruptions or concerns down the road?

Speaker #6: I'm just curious as to what was underlying the real strength in orders in the quarter, and if there could have been any pull-forward in the order demand.

Speaker #6: Thank you

Speaker #3: Ken , I don't think we have seen any evidence of of a pull forward here . So Rahul's comments just a moment ago , when you think about the the breadth of the portfolio , narrowbody , wide body on a global basis , we we just haven't seen that that sort of behavior .

Larry Culp: Ken, I don't think we have seen any evidence of a pull forward here. To Rahul's comments just a moment ago, when you think about the breadth of the portfolio, narrow body, wide body on a global basis, we just haven't seen that sort of behavior. We also mentioned in the prepared remarks that as proud as we are of the operational progress that we've made, we still saw delinquency increase, which means we are past due on the spare parts orders that we do have. I think customers are busy. There's still perhaps some pent-up demand from the pandemic that is working its way through the system. To your specific question, we have not seen that behavior.

Speaker #3: We also mentioned in the prepared remarks that, as proud as we are of the operational progress that we've made, we still saw delinquency increase, which means we are past due on the spare part.

Speaker #3: Orders that we do have . So I think customers are are busy . There still , perhaps some pent up demand from the pandemic that is working its way through the system .

Speaker #3: But to your specific question, we have not seen that behavior.

Speaker #1: Our next question comes from Kristine Liwag with Morgan Stanley.

Operator: Our next question comes from Kristine Liwag with Morgan Stanley.

Speaker #7: Hey , good morning everyone . You know , Larry Raoul , you talk a lot about demand . And I just want to dive a little bit deeper here .

Kristine Liwag: Hey, good morning, everyone. Larry, Rahul, you talked a lot about demand, and I just want to dive a little bit deeper here. You talked about Q2 and Q3 engine removal pipelines are above your shop visit guide. Holding the macro environment you called out, is this higher removal pipeline contemplated in your upper reach 2026 outlook? Or could we see revisions higher in the year if oil resolves in Q3?

Speaker #7: You know, you talked about two Q and three Q engine removal pipelines are above your shop. Visit guide. So, holding the macro environment you called out, is this how your removal pipeline contemplated in your upper reach?

Speaker #7: 2026 outlook. Or could we see revisions higher in the year if oil resolves in Q3?

Speaker #3: Christine , good morning . I , I think were it not for current events , we'd be talking about an increase in the guide this morning .

Larry Culp: Kristine, good morning. I think if it were not for current events, we'd be talking about an increase in the guide this morning, not color and body language toward the high end of the existing range. In many respects, just given the backlog that we've highlighted a couple of times already, both in terms of spare parts, but also shop visits, absent a change in customer behavior and continued progress on our part relative to internal operational execution, that potential does exist, right? But again, I think given current events, we thought it most prudent to simply stay with the range that we issued 90 days ago, provide a little bit more color, particularly with respect to not only the quarter, but H1 here. I won't repeat what we've already said.

Speaker #3: Not color and body language toward the the high end of the existing range . You know , in many respects , just given the backlog that we've highlighted a couple of times already , both in terms of spare parts , but also shop visits , absent a change in customer behavior and continued progress on our part relative to internal operational execution , that that potential does exist .

Speaker #3: Right . But again , I think given current events , we thought it most prudent to simply stay with the range that we issued 90 days ago , provide a little bit more color , particularly with respect to not only the the quarter , but the first half here .

Speaker #3: And I won't repeat what we've already said, but I think in terms of our ability to control the controllable, I feel very good about that.

Larry Culp: I think in terms of our ability to control the controllable. We feel very good about that. The progress that we've made with the supply base has been considerable already this year. I think it's just built on the progress over the last couple of years. You see that not only in the input numbers we've cited, but in turn, the output numbers as well, both in terms of units and dollars. That should continue.

Speaker #3: The progress that we've made with the supply base has been considerable already this year. I think it's just built on the progress over the last couple of years.

Speaker #3: And you see that not only in the input numbers we've cited, but in turn the output numbers as well, both in terms of units and dollars.

Speaker #3: That should continue .

Speaker #4: Yeah. And Christine, this is Larry, said to get to a higher shoppers at number that is not factored into our guidance.

Rahul Ghai: Yeah. Christine, just as Larry said, to get to a higher shop visit number, that is not factored into our guidance. What we'll need to see is better material flow through here than what we have currently factored in to burn some of the delinquency that exists on both spare parts and the shop visits out. That, to your point, will take our services guidance above where we have factored in around $4 billion of growth this year.

Speaker #4: So what we'll need to see is we'll need to see better material flow through here than what we have currently factored in to burn some of that that exists on both spare parts and the shop visits out, so that, to your point, will take our services guidance above where we have factored in around $4 billion of growth this year.

Speaker #1: Our next question comes from Scott Daschle with Deutsche Bank.

Operator: Our next question comes from Scott Deuschle with Deutsche Bank.

Speaker #8: Hi . Good morning .

Scott Deuschle: Hi, good morning.

Speaker #3: Good morning , Scott .

Larry Culp: Morning, Scott.

Speaker #8: Rahul, I was wondering if you might share with us an update on LEAP aftermarket profitability, and particularly how LEAP aftermarket margins are trending in 2026 relative to 2025.

Scott Deuschle: Rahul, I was wondering if you might share with us an update on LEAP aftermarket profitability, and particularly how LEAP aftermarket margins are trending in 2026 relative to 2025?

Speaker #8: And then I'd love to get your latest thinking on the path to margin expansion on the program beyond '26 and over the long term.

Scott Deuschle: I'd love to get your latest thinking on the path to margin expansion on the program beyond 2026 and then for the long term. Thank you.

Speaker #8: Thank you .

Speaker #4: Yeah . No . Scott on Leap , the services business is trending really , really nicely . We're expecting , you know , a further improvement this year on margins .

Rahul Ghai: Yeah, no. Scott, on LEAP, the services business is trending really, really nicely. We're expecting a further improvement this year on margins. Trends have been good for H1 of the year here, and it's coming from a few things. It's coming from increased volume that we are driving in our shops. Larry spoke about the repairs that we are developing in our aftermarket business. This year, we expect the number of repairs that we're developing on LEAP to double over what we developed last year. That is helping reduce the cost of the shop visit. The external channel is coming up nicely as well. We're now at about 15% of our shop visits for LEAP are now performed by third parties. That number was close to 10% just 18, 20 months back. That part of the business is developing nicely.

Speaker #4: Trends have been good for the first half of the year here. And it's coming from a few things. It's coming from increased volume, right.

Speaker #4: That we are driving in our shops. As Larry spoke about, the repairs that we are developing in our aftermarket business.

Speaker #4: And this year, we expect the number of repairs that we're developing on LEAP to double over what we developed last year.

Speaker #4: So that is helping reduce the cost of of the shop visit the external channel is coming up nicely as well . We are at , you know , now about 15% of our shop visits for Leap are now performed by third parties .

Speaker #4: That number was just , you know , 18 , 20 months back . So that's part of the business is developing nicely . So as you know , if you put all that together as you think longer term to your second part of your question , we do expect the Leap service margins start to get to overall Rs service margins .

Rahul Ghai: If you put all that together, as you think longer term to your second part of your question, we do expect the LEAP service margins start to get to overall CES service margins by the time we get into 2028-ish time frame. Really pleased with the progress for a business that was just kind of break even two years ago. I think we made a lot of progress here in the last 18 months.

Speaker #4: By the time we get into 28 ish time frame . So really pleased with the progress . You know , for a business that was just kind of break even two years ago , I think we made a lot of progress here in the last 18 months

Speaker #1: Our next question comes from Robert Stallard with Vertical Research.

Operator: Our next question comes from Robert Stallard with Vertical Research.

Speaker #9: Thank you very much. Good morning.

Robert Stallard: Thanks so much. Good morning.

Speaker #3: Good morning .

Larry Culp: Good morning.

Speaker #9: Just want to follow up on slide five, and that spare parts delinquency chart you've got in there. Is that continued march higher in delinquencies just due to continued demand exceeding supply, or supply chain strain?

Robert Stallard: Just want to follow up on slide five, and that spare parts delinquency chart you've got in there. Is that continued march higher in delinquencies just due to continued demand exceeding supply chain strain? How long do you think it'll take to get that back down to a more reasonable number?

Speaker #9: And how long do you think it will take to get that back down to a more reasonable number?

Speaker #3: Well , it is despite the the progress we've talked about a few times now , this morning , not only with inputs , but outputs just a function of demand outstripping supply .

Larry Culp: Well, it is, despite the progress we've talked about a few times now this morning, not only with inputs, but outputs, just a function of demand outstripping supply. We highlight delinquency simply to make sure investors understand that dynamic is in play here. Operationally, it is a number we are not proud of, because we're failing to meet customer expectations in that regard. I think it's going to take us a while yet here to get to zero delinquency. That clearly is the goal, on-time delivery, one of our critical operational KPIs as part of Flight Deck. We're not going to be able to kind of circle that. I think given the continued momentum we see with our suppliers and in our own operations, that is something that we should deliver on in time, regardless of the demand environment.

Speaker #3: We we highlight delinquency simply to make sure investors understand that that dynamic is in play here . Operationally , it is a number we are not proud of , right ?

Speaker #3: Because we are holding, we're failing to meet customer expectations in that regard. I think it's going to take us a while yet here to get to zero delinquency.

Speaker #3: That clearly is the goal . On time delivery . One of our critical operational KPIs as part of flight deck . So we're not going to be able to kind of circle that .

Speaker #3: But I think, given the continued momentum we see with our suppliers and our own operations, that is something that we should deliver on in time, regardless of the demand environment.

Speaker #1: Our next question comes from Douglas Harnett with Bernstein.

Operator: Our next question comes from Douglas Harned with Bernstein.

Speaker #10: Good morning. Thank you.

Douglas Harned: Good morning. Thank you.

Speaker #3: Good morning .

Larry Culp: Good morning.

Speaker #10: I wanted Larry and Rahul . I wanted I wanted to continue on the on the look at the current environment , because when you look forward and see some of the challenges out there , you know , if we see jet fuel above $200 .

Douglas Harned: Larry and Rahul, I wanted to continue on the look at the current environment, because when you look forward and see some of the challenges out there, if we see jet fuel above $200 in Asia and in Europe, there are quite a few airlines that could be under some real financial pressure. When you look at the steps you need to take over the next year or so, how do you compare the concerns around, say, an airline that simply is in difficult financial straits and can't do an overhaul versus simply reductions in flying hours that could take some dollars out of LTSAs? How do you think about these different sort of hazards out there over the next year, perhaps?

Speaker #10: In Asia in , in Europe , there are quite a few airlines that could be in some real under some real financial pressure .

Speaker #10: And when you , when you look at the steps , you need to take over the next year or so , how do you compare the concerns around , say , an airline that simply is in financial difficult financial straits and can't do an overhaul versus simply reductions in flying hours that could take some dollars out of lt's a , how do you how do you think about these different sort of hazards out there over the next year , perhaps

Larry Culp: Well, Doug, I think the scenarios that we talked about earlier have us contemplating a range of possibilities. Given that none of us know how things are going to play out here, particularly with respect to duration in the Middle East, I don't think we've tried to tether ourselves to one scenario or another. We have considerable backlog. We've talked about that a number of times this morning. We are mindful of the risks that we may have in the customer base. Rahul and the team have increased the work we do in that regard. First and foremost, we're trying to support our customers as best we can, to weather these storms as we have in past situations, be it the pandemic, be it the GFC, and even situations that were of lesser impact.

Speaker #3: Well , Doug , I think the the scenario that we talked about earlier have us contemplating a range of possibilities , given that none of us know how things are going to play out here , particularly with respect to duration in the Middle East .

Speaker #3: I don't think we've tried to tether ourselves to one scenario or another. But we have considerable backlog. We've talked about that a number of times this morning.

Speaker #3: We are mindful of the risks that we may have in the customer base. Rahul and the team have increased the work we do in that regard.

Speaker #3: But first and foremost , we're trying to support our customers as best we can to weather the storms as we have in in past situations , be it the pandemic , be it the GFC and even even situations that were of of lesser impact .

Speaker #3: We are also putting our spending under greater scrutiny, continuing to invest in the future of flight, of course, and continuing to invest in improved durability and lowering the cost of ownership.

Larry Culp: We are also putting our spending under greater scrutiny, continuing to invest in the future of flight, of course, continuing to invest in improved durability and lowering the cost of ownership. Given the situation, we are, I think, making sure that as a senior leadership team, we are spending in a, let's say, in a more cautious fashion today, given what we know and given what we don't.

Speaker #3: But given the situation we are in, I think making sure that, as a senior leadership team, we are spending in a...

Speaker #3: Let's just say, in a more cautious fashion today, given what we know and given what we don't.

Speaker #1: Our next question comes from Scott Meeks with Melius Research.

Operator: Our next question comes from Scott Mikus with Melius Research.

Speaker #11: Morning , Larry and Rahul . I figured there would be a lot of questions about the conflict in the Middle East . So I wanted to check in on the GE nine x Boeing flagged a fatigue issue with the engine .

Scott Mikus: Morning, Larry and Rahul.

Larry Culp: Morning.

Scott Mikus: I figured there'd be a lot of questions about the conflict in the Middle East, so I wanted to check in on the GE9X. Boeing flagged a fatigue issue with the engine, so just curious if you could provide an update on that. Is there any change to the expectations you had for losses on the program this year?

Speaker #11: So, just curious if you could provide an update on that. Is there any change to the expectations you had for losses on the program this year?

Speaker #3: No , no , no change on schedule . No change on on losses . You know , I just start Scott to reiterate that we're thrilled to be the sole source partner on the on the 777X .

Rahul Ghai: No change on schedule, no change on losses. I just start, Scott, to reiterate that we're thrilled to be the sole source partner on the 777X. We've got over 1,000 engines now on order, and customers want the engines, they want the airplanes. What we've shared with folks is that we saw, back in January, a durability issue with the mid-seal. Remind everybody, this is on an engine that was certified back in September 2020. The crack that we uncovered during a shop visit, which is part of a flight test engine, is something we've seen before. We think we are at root cause, and we're finalizing the modification as we speak. We've been fully transparent with Boeing and the FAA every step of the way. I think as Boeing has said, we believe we're on track with the certification plan that has been communicated to customers.

Speaker #3: We've got over a thousand engines now on order. And customers want the engines. They want the airplanes. What we've shared with folks is that we saw back in January a durability issue with the mid seal.

Speaker #3: For . Remind everybody this is on an engine that was certified back in September of 2020 . The the crack that we uncovered during a shop visit , which was part of a flight test engine , is something we've we've seen before .

Rahul Ghai: The crack that we uncovered during a shop visit, which is part of a flight test engine, is something we've seen before. We think we are at root cause, and we're finalizing the modification as we speak. We've been fully transparent with Boeing and the FAA every step of the way. I think as Boeing has said, we believe we're on track with the certification plan that has been communicated to customers.

Speaker #3: We think we are at root cause, and we're finalizing the modification as we speak. And we've been fully transparent with Boeing and the FAA every step of the way.

Speaker #3: So I think it's—Boeing has said, we believe we're on track with the certification plan that has been communicated to customers. No change to the schedule.

Rahul Ghai: No change to the schedule. Of note, the 777X flight test program continues. It's ongoing. With respect to deliveries, we had deliveries in Q1. Currently, we're continuing to build up and assembly to the point of the mid-seal. We're modifying the tooling and ramping some suppliers for the modified part. We'll end up having deliveries that will end up more H2 weighted. I think at this juncture, no reason to believe the full year will be any different than what we've communicated.

Speaker #3: And of note the 777 flight test program continues , right . It's it's ongoing with respect to deliveries . We had deliveries in the first quarter .

Speaker #3: Currently, we're continuing to build up in assembly to the point of the mid seal. We're modifying the tooling and ramping some suppliers for the modified part.

Speaker #3: So, we'll end up having deliveries that will be more second-half weighted. But I think, at this juncture, there's no reason to believe the full year will be any different than what we've communicated.

Speaker #1: Our next question comes from Myles Walton with Wolfe Research.

Operator: Our next question comes from Myles Walton with Wolfe Research.

Speaker #10: Thanks. Good morning. I was...

Myles Walton: Thanks. Good morning. I was hoping to switch gear a little bit on aeroderivatives. I know it's an off-topic question, but you had a disclosure that had a restatement and moved aeroderivatives equipment from your CES segment to your DPT segment. What caught me in my eye was you had about 94 deliveries of aeroderivatives last year to your customers, but the pricing on those looked fairly benign relative to the potential for where pricing could be, given the backdrop for power. Can you talk about what the strategy is for aeroderivatives and what the upside opportunity could be there for repricing and volume? Thanks.

Speaker #12: Hoping to switch gears a little bit on aero derivatives. I have an off-topic question, but you had a disclosure that had a restatement and moved derivatives equipment from your CES segment to your DPT segment.

Speaker #12: And what caught my eye was you had about 94 deliveries of air derivatives last year to your customers, but the pricing on those looked fairly benign.

Speaker #12: Relative to the potential for where pricing could be given the backdrop for power, can you talk about what the strategy is for aero-derivatives, and what the upside opportunity could be there for repricing and volume?

Speaker #12: Thanks .

Speaker #4: Yeah . So Miles on aero derivatives , as you know , we provide the we provide the engine and then our partners in the JV , they take the product to market .

Rahul Ghai: Yeah. Miles, on aeroderivatives, as you know, we provide the engine, and then our partners in the JV, they take the product to market. They do the system integration, add some controls with it. There's work done by both parties. But I think what you saw in our disclosure is basically the fact that we are burning the pre-spin backlog. That was backlog that we had sold when we were part of one company that had sort of different agreements. Post-spin, the pricing to the JV has been revised substantially, and we are kind of working our way through the old backlog, and we should transition to the orders that we have won post-spin in the next, I would say, 18 to 24 months. You'll see gradual increase in pricing here over the next few months to quarters. You'll see an improvement.

Speaker #4: They do the system integration , add some controls . So there's , there's work done by by both the parties . But I think what you saw in our disclosure is basically the fact that we are burning the pre-spin backlog , right ?

Speaker #4: That was backlog that we had sold when we were part of one company that had certain different agreements post-spin. The pricing to the JV has been revised substantially.

Rahul Ghai: Post-spin, the pricing to the JV has been revised substantially, and we are kind of working our way through the old backlog, and we should transition to the orders that we have won post-spin in the next, I would say, 18 to 24 months. You'll see gradual increase in pricing here over the next few months to quarters. You'll see an improvement.

Speaker #4: And we're kind of working our way through the old backlog, and we should transition to the backlog that we've—to the orders that we have.

Speaker #4: One post spin in the next , I would say 18 to 24 months . So you see gradual increase in pricing here over the next few few months to quarters , right .

Speaker #4: So you'll see see an improvement . But overall , I think it's a it's a great business . It is . We sold out here through 2030 .

Rahul Ghai: Overall, listen, I think it's a great business. We have sold out here through 2030s. That's one leg of the stool, and then obviously everything that you're seeing with now CFM56 getting added potentially to the power generation capacity. That gives another leg of growth towards the CFM56 platform, be it through spare parts sales to third parties who are developing that product or some other form of collaboration. I think we are exploring all those things, but overall, the aeroderivative business is in a really good spot of the market, both with the existing product that we have and potential new entrants to that market. Miles, we moved it over, as a reminder for everybody. We moved it over from CES into DPT, really to give the commercial team the opportunity to focus exclusively on the airliners, the airlines, and the airframers.

Speaker #4: So that is , you know , that's one leg of the stool . And then obviously everything that you're seeing with now Cfm56 getting added to potentially to the power generation capacity , that gives another leg of growth to our the Cfm56 platform , be it through , you know , spare parts sales to third parties who are developing that product or some other form of collaboration .

Speaker #4: So I think we are exploring all those things . But overall , the aero derivative business is in is good spot in the market , both with the existing products that we have and potential new entrants to that market .

Rahul Ghai: I think we are exploring all those things, but overall, the aeroderivative business is in a really good spot of the market, both with the existing product that we have and potential new entrants to that market. Miles, we moved it over, as a reminder for everybody. We moved it over from CES into DPT, really to give the commercial team the opportunity to focus exclusively on the airliners, the airlines, and the airframers.

Speaker #3: And miles . We moved it over as a reminder for everybody . We moved it over from Rs into DPT really to give the commercial team the opportunity to focus exclusively on the airliners , the airlines and the Air framers .

Speaker #3: And at the same time , there are there are some similarities to part of our defense engines and services business , especially in and around Marine applications .

Rahul Ghai: At the same time, there are some similarities to part of our defense engines and services business, especially around marine applications. There's a better operational home for this business in the other segment. That's the sole reason for the move earlier this year.

Speaker #3: So there's a little bit more . There's a better operational home for this business . And the the other segment , that's the reason for the the move .

Speaker #3: Earlier this year

Speaker #1: Our next question comes from John Gordon with Citi.

Operator: Our next question comes from John Godyn with Citi.

Speaker #13: Hey guys . Thanks for taking my question . If I could just come back to CS Martin specifically . There's a concern out there that , you know , if this fuel shock continues retirement spike in a particular your Rs margins would be at risk .

John Godyn: You guys, thanks for taking my question. If I could just come back to CES margins specifically. There's a concern out there that if this fuel shock continues, retirement spike, and in particular, your CES margins would be at risk. You've obviously been very thoughtful about your guidance, embedded a pretty conservative outlook for global aviation, and it doesn't seem like you think that risk is particularly likely. I'd love to just get your reaction to that, to the concern on margin risk, and what positive offset to this mix effect might exist if global aviation continues to deteriorate?

Speaker #13: You've obviously been very thoughtful about your guidance, embedded a pretty conservative outlook for global aviation. And it doesn't seem like you think that risk is particularly likely.

Speaker #13: So, I'd love to just get your reaction to that—to the concern on margin risk—and what positive offsets to this mixed effect might exist if global aviation continues to deteriorate.

Speaker #4: So I think there are two parts to the question . I think for for the current year , right ? As you think about the margins we've baked in kind of flattish margins here for the year .

Rahul Ghai: I think there's two parts to the question. I think for the current year, as you think about the margins, we've baked in kind of flattish margins here for the year. Now, as you think about the growth for the year, the $4 billion of growth that we are now expecting, keep in mind, the first quarter grew by about $2 billion, and then we are expecting high teens growth here in the Q2. That gets us closer to two-thirds to three-fourths of the growth will be in the H1. We feel good about the growth rates that we have for the year, and that should support kind of the margin expectations that we have for the business. Now again, what's happening in the year, as we've discussed previously, is that we're getting good support from our services growth.

Speaker #4: Now , as you think about the growth for the year , right ? The $4 billion of growth that we are now expecting , keep in mind , the first quarter grew by about $2 billion .

Speaker #4: And then we have expecting high teens growth here in the second quarter so that , you know , that gets us closer to two thirds of , you know , three fourths of the growth will be in the first half of the year .

Speaker #4: So we feel good about the growth rates that we have for the year . And that should support kind of the the margin expectations that we have for the business .

Speaker #4: Now again . What's happening in the year , as we've discussed previously , is that we're getting good support from our services growth , right ?

Speaker #4: That's dropping through at a healthy clip. And in the first quarter, service margins were actually up year over year. So that was a positive trend.

Rahul Ghai: That's dropping through at a healthy clip. In Q1, service margins were actually up year over year. That was a positive trend. Now we're not baking that in for the full year. Full year, we're expecting service margins to be flat, but it's a good start to the year. That positive drop through from the services is getting offset by the OE growth that we saw. You saw that in Q1. For full year, we're expecting LEAP to be up 15%. While both spare engines and install engines are going to be up for the year, the growth is primarily going to be driven by install engines here for the year. Then we have 9X shipments. If you put all that together, we expect kind of flattish margins for the year for CES.

Speaker #4: Now, we're not baking that in for the full year. For the full year, we're expecting service margins to be flat. But it's a good start to the year.

Speaker #4: And that that that positive drop through from the services is getting offset by the growth that we saw . You know , you saw that in the first quarter for full year .

Speaker #4: We’re expecting LEAP deliveries to be up 15%. And while both spare engines and installed engines are going to be up for the year, the growth is primarily going to be driven by installed engines here for the year.

Speaker #4: And then we have nine X shipments . So that kind of you put all that together . We expect kind of flattish margins for the year for Rs .

Rahul Ghai: Now as you go outside the year, John, we spoke about the LEAP margin trajectory earlier to Scott's question. We expect LEAP margins to approach overall CES levels of service profitability here in the next couple of years. 9X losses should also peak by the time we get to 2028, just given that we're driving a 50% reduction in 9X cost. LEAP margins improving, 9X headwinds kind of peaking in 2028. As we look beyond that is when we expect both accelerated profit and margin expansion in the business.

Speaker #4: Now as you go outside the year , John , we spoke about the leap margin trajectory earlier to Scott's question . We expect leap margins to approach overall Rs levels of , you know , service profitability here in the next couple of years .

Speaker #4: Nine X losses should also peak by the time we get to 2028, right? Just given that we're driving a 50% reduction in Nine X cost.

Speaker #4: So, LEAP margins improving 9x, headwinds kind of peaking in '28. And as we look beyond that, that is when we expect both accelerated profit and margin expansion in the business.

Operator: Our next question comes from Gavin Parsons with UBS.

Speaker #1: Our next question comes from Gavin Parsons with UBS.

Operator: Good morning. Thanks, guys. This is Joel Santos filling in for Gavin Parsons. Thanks for taking my question. Moving to Defense, strong results in Q1 and solid margins, stronger order environment. As we look through the rest of 2026, how should we think about the sustainability of growth margins in the segment?

Joel Santos: Good morning. Thanks, guys. This is Joel Santos filling in for Gavin Parsons. Thanks for taking my question. Moving to Defense, strong results in Q1 and solid margins, stronger order environment. As we look through the rest of 2026, how should we think about the sustainability of growth margins in the segment?

Speaker #14: Good morning . Thanks , guys . This is Joel Santos . I'm filling in for Gavin Passes . Thanks . Thanks for taking my question .

Speaker #14: Moving to Defense, strong results in one quarter and solid margins. Stronger order environment. As we look through the rest of '26.

Speaker #14: How should we think about sustainability of growth margins in the segment?

Rahul Ghai: For DPT, again, you saw our revenue growth in Q1. We're expecting high teens revenue growth for Q1. Overall, if you look at the results for Q1, they keep us at pace for what we've guided for the full year, both on year over year profit growth and the absolute dollars of profit that we delivered in Q1. Now margins were a little bit light in Q1, largely because equipment grew more than the aftermarket, but that mixed in. I think overall, we're kind of on track as we think about the year. We're going to drive strong output. Productivity is going to get better, and the mix should also improve as we go through the year.

Speaker #4: So for DPT , again , you saw our our revenue growth in the in the first quarter , you know , we expecting high teens revenue growth for the first quarter , you know , and overall , if you look at the results for the first quarter , the key keep us at pace for what we've guided to the full year .

Speaker #4: Both on year over year profit growth and the absolute dollars of profit that we delivered in the first quarter . Now , margins were a little bit light in the first quarter , largely because of grew more than the the aftermarket , you know , but that mix .

Speaker #4: But I think overall , we're kind of on track as we think about think about the year . So we're going to drive strong output .

Speaker #4: The productivity is going to get better . And the mix should also improve as we go through the year . So I feel really , you know , given the growth rates that we had in the first quarter , we feel good about the year .

Rahul Ghai: I feel, given the growth rates that we had in Q1, we feel good about the year. As you said in our prepared remarks, we do expect DPT to be at the higher end of the guidance that we previously committed, just given the growth rates that we are seeing in Q1 and the drop we expected from that.

Speaker #4: And you took as you as you said in our prepared remarks , we do expect DPT to be the higher end of the guidance that we previously committed , just given the growth rates that we are seeing in the first quarter .

Speaker #4: And the drop-through expected from that.

Operator: Our next question comes from Seth Seifman with JP Morgan.

Speaker #1: Our next question comes from Seth Seifman with J.P. Morgan.

Seth Seifman: Hey, thanks very much, and good morning.

Speaker #15: Hey , thanks very much , and good morning . In the morning in the outlook , where you talk about Brent prices remaining fairly elevated through through Q3 , I think , you know , in addition to Brent prices , we've seen significant increases in the spread for for jet fuel .

Rahul Ghai: Good morning, Seth.

Seth Seifman: Morning. In the outlook where you talk about Brent prices remaining fairly elevated through Q3, I think. In addition to Brent prices, we've seen a significant increase in the spread for jet fuel. Are there special things we should be thinking about there and reasons why from a jet fuel perspective that this could carry on longer and/or be more disruptive than simply what's happening with oil prices?

Speaker #15: Are there special things we should be thinking about there, and reasons why, from a jet fuel perspective? This could carry on longer and/or be more disruptive than simply what's happening with oil prices.

Rahul Ghai: Seth, I don't think we're trying to be too granular in the underlying assumptions, right? I think the economic realities you've just pointed out are there, and I hope what we're taking is a conservative set of assumptions on board here between now and let's say Labor Day. Time will tell. By and large, we know that between the inflation and potential scarcity in other parts of the world, that we could see some near-term airline behavior shift, right? By near term, I mean the late summer, early fall, call it H2. We're also assuming that by the end of the summer, we're on our way back to more normal conditions.

Speaker #3: Seth , I don't think we're trying to be to granular in the underlying assumptions , right ? I mean , I , I think the economic realities you've just pointed out are , are there and I hope what we're taking is a conservative set of assumptions On board here between now and , let's say , Labor Day time .

Speaker #3: Time will tell . But but by and large , we know that between the the inflation and potential scarcity in . In other parts of the world that we could see some near near-term airline behavior shift right by near-term , I mean the the late summer , early fall , call it the second half , but we're also assuming that by the end of the summer , we're we're on our way back to more normal conditions .

Rahul Ghai: Given what we've seen before, we may have a lag in the aftermarket on the commercial side of the business from what's happening currently, but then we tend to have a spring back, which is why we've kind of alluded to some of our historic reference points in that regard. That demand tends to get pushed out as opposed to going missing indefinitely.

Speaker #3: And given what we've seen before, we may have a lag in the aftermarket on the commercial side of the business from what's happening currently.

Speaker #3: But then we , we tend to have a , a spring back , which is why we've kind of alluded to some of our historic reference points in that regard .

Speaker #3: That demand tends to get pushed out as opposed to going missing. And definitely.

Operator: Liz, we have time for one more question. This question comes from Gautam Khanna with TD Securities.

Speaker #16: Liz, we have time for one more question.

Speaker #1: This question comes from Gautham with TD Securities.

Gautam Khanna: Hey, thank you. I had actually two questions. The first one just on supply chain. You mentioned delinquencies and the like, but if you could just characterize how material improved sequentially and maybe just an update you've given in the past on how many suppliers and where the pinch points are strongest. Just secondly, was wondering on the company's aftermarket exposure to kind of low-cost carriers or business models in the airline industry that might be more affected by the high oil environment. Maybe if you could elaborate on that.

Speaker #17: Hey . Thank you . I had actually two questions , but the first one just on supply chain , you mentioned delinquencies and the like , but if you could just characterize how material improved sequentially and where just an update , you given in the past on how many suppliers and , you know , where the pinch points are strongest .

Speaker #17: And then just secondly , was wondering on the company's aftermarket exposure to kind of low cost carriers or business models in the airline industry that might be more affected by , you know , a , the tough oil environment .

Speaker #17: Maybe if you could elaborate on that.

Larry Culp: Yeah. Maybe I'll take the supply chain question. I'll let Rahul speak to certain customer segment risk. I think from an input perspective, we mentioned earlier that we've seen double-digit increases again sequentially and year-over-year from some of the critical suppliers. I think we've said all along, we're going to be the problem-solvers, not the finger-pointers. I just am really pleased with the way we've had suppliers across the board engage with us. It's been a journey at every point. I think we're just simply getting better. We're more transparent. We're more trustworthy with each other, and in turn, we've just allowed our best people to go to Gemba, to go to where the constraints, the bottlenecks exist, and solve them. Again, there's no way we take engine output up 43%, right, without that sort of support from the customer base. Likewise, commercial services up 39%.

Speaker #3: Yeah , maybe , maybe I'll take the supply chain question . I'll let Rahul speak to certain customer segment risk . You know , I think from a an input perspective , we mentioned earlier that we've seen double digit increases , again , sequentially in year over year from some of the critical suppliers .

Speaker #3: I think we've said all along , we're going to be the problem solvers , not the finger pointers . And I just am really pleased with the way we've had suppliers across the board engage with us .

Speaker #3: It's been a journey at every at every point . But I think we're just simply getting better . We're more transparent , we're more trustworthy with each other .

Larry Culp: We're more transparent. We're more trustworthy with each other, and in turn, we've just allowed our best people to go to Gemba, to go to where the constraints, the bottlenecks exist, and solve them. Again, there's no way we take engine output up 43%, right, without that sort of support from the customer base. Likewise, commercial services up 39%.

Speaker #3: And in turn, we've just allowed our best people to go to Gemba, to go to where the constraints, the bottlenecks exist, and solve them.

Speaker #3: Again , there's no way we take engine output up 43% , right ? Without that sort of support from the customer base . Likewise , commercial services up 39% .

Larry Culp: There's no way we're able to get that volume out the door to serve our airline customers without really good progress using Flight Deck with the supply base. That is not to suggest that we're all clear between now and 2030. There's still a lot of work because we're going to have to do more every year. What a wonderful challenge to have. Again, kudos to our team. Kudos to the supply base for engaging and supporting us with our ultimate customers in mind, particularly here in the first part of 2026.

Speaker #3: There's no way we're able to get that volume out the door to serve our airline customers without really good progress . Using Flight Deck with the supply base , that is not to suggest that we're all clear between now and 2030 , there's still a lot of work because we're going to have to do more every year .

Speaker #3: But what a wonderful challenge to have . And again , kudos to our team . Kudos to the supply base for engaging and supporting us with our ultimate customers in mind , particularly here in the first part of 2026 .

Rahul Ghai: Go to your second question. If I step back here and just look at the environment that we've seen, and we've spoken to the order trends here through the start of the conflict. There's nothing in the environment here that's giving us pause, right? The customers are eager to get back in the air. Yes, they're experiencing temporary disruptions, just given everything that's going on directly in the Middle East, a little bit from lack of availability and fuel prices, but everybody's super eager to get back and support the flying public. That's what we are seeing right now.

Speaker #4: And call to your second question . I mean , if I step back here and just look at the environment that we're seeing , again , we've spoken to the order trends here through the start of the conflict .

Speaker #4: There's nothing in the environment here that's giving us pause, right? The customers are eager to get back in the air. Yes.

Speaker #4: They're experiencing temporary disruptions . Just given everything that's going on directly in the Middle East , a little bit from lack of lack of availability of of fuel prices , but everybody's super eager to get back and , and support the flying public .

Speaker #4: So that's what we are seeing right now . You speak , we spoke to the strength that we expecting here in the in the second quarter .

Rahul Ghai: We spoke to the trends that we're expecting here in Q2, and as we think about the full year, had it not been for the environment that we're in, and I'm repeating something Larry said earlier, we would have raised our guidance because Q1 was about $300 million better than what we had expected at the beginning of the year. Then we're carrying that strength into Q2, that the momentum is clearly carrying through, and we spoke to both sequential and year-over-year profit growth here in Q2 with high teens services growth expected. Then H2 is just about what we don't know. I think that is the question. Hopefully, as Larry said earlier, we're being conservative, cautious, and prudent, whatever word you want to use.

Speaker #4: And as we think about the full year, had it not been for the environment that we're in, and I'm repeating something Larry said earlier, we would have raised our guidance because the first quarter was about $300 million better than what we had expected at the beginning of the year.

Speaker #4: And then we're carrying that strength into the second quarter . The momentum is clearly carrying through , and we spoke to both sequential and year over year profit growth here in the second quarter , with high teens , services growth expected .

Speaker #4: So . And then the second half is just about what we don't know . I think that that is the question . So hopefully as Larry said earlier , we've been conservative and cautious prudent whatever words you want to use , I think , again , time will tell .

Rahul Ghai: I think again, time will tell, but we feel good about the year as we sit here today. We're not seeing any disruptive behavior on the part of the customers. We're not seeing risks that we didn't have maybe just a couple of months back. We're monitoring the situation very closely, as you would expect us to, and we would give updates throughout the quarter, as we learn more.

Speaker #4: But we feel good about the year as we sit here today, and we're not seeing any disruptive behavior on the part of the customers.

Speaker #4: We're not seeing a risk that we didn't have , maybe just a couple of months back . So but we're monitoring the situation very , very closely , as you would expect us to .

Speaker #4: And we would give updates throughout the quarter as we learn more.

Blaire Shoor: Larry, any final comments?

Larry Culp: Larry, thank you. Just in closing, Flight Deck will help us deliver what our customers value most, higher outputs, improved durability, and lower costs of ownership, even as we navigate the current environment. We're confident in our trajectory and our ability to deliver value for customers and shareholders. We appreciate your time today and your interest in GE Aerospace.

Speaker #16: Larry, any final comments?

Speaker #3: Claire . Thank you . Just in closing , flight deck will help us deliver what our customers value most . Higher outputs , improved durability and lower costs of ownership .

Speaker #3: Even as we navigate the current environment, we're confident in our trajectory and our ability to deliver value for customers and shareholders. We appreciate your time today and your interest in GE Aerospace.

Operator: Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating. You may now disconnect.

Q1 2026 General Electric Co Earnings Call

Request DemoDemo

GE Aerospace

Earnings