Aerospace Giant Soars on Strong Q4 Earnings
Boosted by Demand for High-Margin Parts and Services
GE Aerospace has kicked off the new year on a high note, forecasting a stronger profit in 2025 after its fourth-quarter earnings surpassed Wall Street estimates. The company’s shares surged 6.5% in pre-market trading following the announcement, which also included plans to increase share buybacks to $7 billion and its dividend by 30%.
Aircraft Shortages Drive Up Demand
Production delays at major manufacturers like Boeing and Airbus have resulted in longer wait times for new jets, forcing airlines to rely on older, maintenance-intensive aircraft to meet growing demand for air travel. This has created a lucrative opportunity for companies like GE Aerospace, which generates significant revenue from the sale of parts and services over the lifespan of its products.
Commercial Engines and Services Segment Sees 44% Profit Jump
The company’s commercial engines and services segment reported a 44% profit increase to $2.16 billion, driven by revenue growth of 19% to $7.65 billion. Notably, more than 70% of the segment’s revenue comes from the sale of parts and services.
Supply Chain Constraints Pose Challenges
While GE Aerospace is aligned with demand for its engines in 2025 and beyond, deliveries remain constrained by material availability issues. In the December quarter, production of LEAP engines, which power Airbus and Boeing narrowbody aircraft, declined 5% from a year ago. The company produces these engines in a joint venture with France’s Safran SA.
2025 Profit Outlook
GE Aerospace expects 2025 profit to fall within the range of $5.10 per share to $5.45 per share, slightly above analysts’ average estimates of $5.23 per share. The company reported an adjusted profit of $1.32 per share, beating analysts’ average expectations of $1.04 per share. Adjusted revenue for the fourth quarter ended Dec. 31 rose 16% to $9.88 billion, surpassing Wall Street expectations of $9.51 billion.
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