⚠ A Quarter of the Revenue Earns a Fifth of the ProfitModerate threat

GE Aerospace (GE) — threat to the moat

A quarter of the revenue produces an eighth of the profit, and the segment definition just changed.

The arithmetic of GE Aerospace's two segments is lopsided in a way the headline revenue split conceals.

Segment profit in 2025: $10,157 millionCommercial Engines & Services $8,861m — 87%Defense & Propulsion Technologies $1,296m — 13%DPT is about 23% of revenue and 12.8% of segment profit.
A quarter of the revenue produces an eighth of the profit, and the segment definition just changed.

Defense & Propulsion Technologies was $10,554 million of revenue in 2025 — about twenty-three per cent of the company — and produced $1,296 million of segment profit, which is 12.8% of the $10,157 million total1. Commercial Engines & Services was $33,314 million of revenue and $8,861 million of profit2. A quarter of the revenue produces an eighth of the profit.

The structural reason is covered elsewhere on these pages: a government customer with cost visibility sets a different price from an airline with no alternative. The consequence for the company as a whole is that its reported margin is a blend of a very good business and an ordinary one, and that growth in the ordinary one dilutes it.

The segment is also being reshaped in a way that makes comparison harder. On 15 January 2026 GE Aerospace announced that Commercial Engines & Services would expand to include the entire commercial engine lifecycle, and that the Aeroderivative business, previously in CES, would move to DPT3. Comparatives from 2026 onwards are on a different basis from 2025 and earlier.

What defence contributes that the margin does not capture is counter-cyclicality and customer-funded development: $1,409 million of 2025 research and development came from customers and partners, primarily the US Government4. That is real and it is not visible in a margin.

Compare the DPT margin with the CES margin: 12.3% against 26.6% in 20255, with DPT reaching 13.8% in the June 2026 quarter6. A defence margin that stalls in the low teens while defence revenue grows faster than commercial would be a slow drag on the company's blended return.

References
  1. ReportedDefense & Propulsion Technologies was $10,554 million of revenue in 2025 — about twenty-three per cent of the company — and produced $1,296 million of segment profit, which is 12.8% of the $10,157 million total.
    GE Aerospace Form 10-K, FY2025 - notes to the consolidated financial statements — the segment note including segment expenses, segment profit and other segment income; contract assets, contract liabilities and long-term service agreement balances; the remaining performance obligation note with its expected recognition schedule; goodwill and intangible assets; and the geographic revenue table. — FY2025 · publ. January 2026 · source ↗
  2. ReportedCommercial Engines & Services was $33,314 million of revenue and $8,861 million of profit.
    GE Aerospace Form 10-K, FY2025 - Segment Operations — Commercial Engines & Services: segment revenue, profit and margin, commercial engine and LEAP unit deliveries, internal shop visit revenue growth, the CES remaining performance obligation, the 2025 engine commitments from Qatar Airways, Emirates, International Airlines Group, ANA Holdings, Malaysia Aviation Group, Korean Air, Cathay Pacific and Pegasus, and commercial departures growth. — FY2025 · publ. January 2026 · source ↗
  3. ReportedOn 15 January 2026 GE Aerospace announced that Commercial Engines & Services would expand to include the entire commercial engine lifecycle, and that the Aeroderivative business, previously in CES, would move to DPT.
    GE Aerospace Form 10-Q for the quarter ended June 30, 2026, condensed consolidated financial statements and notes — including the January 15, 2026 segment change under which Commercial Engines & Services expanded to the entire commercial engine lifecycle and the Aeroderivative business moved to Defense & Propulsion Technologies. — Q2 2026 · publ. July 2026 · source ↗
  4. ReportedWhat defence contributes that the margin does not capture is counter-cyclicality and customer-funded development: $1,409 million of 2025 research and development came from customers and partners, primarily the US Government.
    GE Aerospace Form 10-K, FY2025 - Item 1 general and Item 2 Properties — the installed base of approximately 50,000 commercial and 30,000 military engines and the statement that it supports an aftermarket representing approximately 70% of revenue, the FLIGHT DECK operating model, customers in approximately 120 countries, the facility count, human capital and employee numbers, the intellectual property discussion, the research and development table splitting company-funded from customer- and partner-funded spending, and the engine testing milestones. — FY2025 · publ. January 2026 · source ↗
  5. ReportedCompare the DPT margin with the CES margin: 12.3% against 26.6% in 2025, with DPT reaching 13.8% in the June 2026 quarter.
    GE Aerospace Form 10-K, FY2025 - Segment Operations — Defense & Propulsion Technologies: segment revenue split between Defense & Systems and Propulsion & Additive Technologies, equipment and services revenue, segment profit and margin, defence engine unit deliveries, the DPT remaining performance obligation, the US Air Force F110-GE-129 Indefinite Delivery/Indefinite Quantity contract valued up to $5 billion, the Hindustan Aeronautics F404-GE-IN20 order valued at $1.6 billion, and the government-funding discussion. — FY2025 · publ. January 2026 · source ↗
  6. ReportedCompare the DPT margin with the CES margin: 12.3% against 26.6% in 2025, with DPT reaching 13.8% in the June 2026 quarter.
    GE Aerospace second-quarter 2026 earnings release (Exhibit 99.1 to Form 8-K of July 16, 2026) — total company GAAP and non-GAAP results, segment revenue, orders and operating profit, free cash flow, the raised full-year 2026 guidance for adjusted revenue growth, operating profit, adjusted earnings per share and free cash flow, the LEAP-1B durability kit certification, the XA102 and GE426 defence programmes, the NASA hybrid-electric ground tests, and the chief executive's commentary. — Q2 2026 · publ. 16 July 2026 · source ↗
Sources
Generated September 23, 2026