Engine maker GE Aerospace increased shipments of its LEAP aircraft engine during the latest quarter, as the company lifted its full-year guidance on greater demand for its commercial aftermarket services.
Higher deliveries bode well for consumption of titanium- and nickel-based alloys used in an aircraft engine's low-pressure and high-pressure sections, as supply chains — especially for titanium — have been pressured by downstream disruptions that have slowed new orders and delayed intake.
Ohio-based GE Aerospace's LEAP shipments climbed by 38pc in the second quarter from the same prior-year period, the company said on Thursday. Outright totals were not disclosed, but Argus estimates deliveries to have totaled around 410 units based on the 297 LEAPs that GE Aerospace handed off in 2024's second quarter.
The LEAP engine powers aerospace manufacturers' main narrowbody programs, with the -1B variant used exclusively on Boeing's 737 MAX and the -1A variant an option for Airbus' A320neo family. GE Aerospace produces the LEAP with France-based Safran through their CFM International joint venture.
The company expects to deliver 2,500 LEAPs in 2028, as it ramps production to meet Boeing's and Airbus' targeted build rates.
Total commercial deliveries in the latest quarter rose by 37pc over the 402 engines delivered in the same period a year ago. Engine shipments for GE Aerospace's defense segment surged by 84pc from the 87 handed over last year.
GE Aerospace credited improvements in its supply chain for helping drive higher engine shipments, with the company saying output at its 12 priority suppliers increased by 10pc sequentially. GE added that those companies were able to deliver on 95pc of its committed volumes in the quarter.
That stability should help the company burn through $3bn worth of "trapped inventory" that has accumulated over the past two years, GE Aerospace said. Trapped inventory relates to materials that have been purchased but that cannot be used yet because other necessary parts are missing.
Tariff pressures remain a concern for GE Aerospace, which still anticipates incurring a $500mn profit hit this year if higher "reciprocal" duties are implemented by US president Donald Trump come 1 August. Chief executive Larry Culp echoed his calls for a return to a tariff-free environment for the commercial aerospace industry, as the US continues with a Section 232 national security probe into imports.
Still, some pressures have abated after Beijing and the White House reached a framework for a trade deal that has allowed GE Aerospace and other original equipment manufacturers to resume shipments to Chinese carriers. The company also sees "reduced risk for spare engines and spare part deliveries" with the absence of retaliatory tariffs in China "thus far."
The company continues to work with Boeing to certify a new high-pressure turbine (HPT) blade, approval for which GE Aerospace expects to come in the first half of 2026. The upgrade kit — already being implemented on engines for Airbus — is expected to increase the LEAP's time-on-wing by "more than twofold."
Aftermarket services fueling growth
Greater demand for GE Aerospace's maintenance, repair and overhaul (MRO) services lifted the company's earnings in the second quarter, a trend it expects to continue as airlines are forced to fly their aging fleets longer because of delays in new aircraft deliveries.
Quarterly aftermarket revenue increased by 21pc to $7.3bn on the year, as GE Aerospace sold more spares and aircraft intake for shop visits rose both at internal and third-party facilities. The company foresees MRO demand to only climb as its newer-generation engines — the LEAP and GEnx — begin their repair cycles and older-generation engines — the CFM56 and GE90 — continue to operate.
The company estimates that aircraft retirements will average around 1.5pc this year, before rising to 2-3pc in 2026 and normalizing at 3-4pc going forward. Baked into those assumptions are that Boeing and Airbus deliver on their growth targets.
GE Aerospace raised its full-year outlook for operating profit to $8.2bn-8.5bn from $7.8bn-8.2bn in its prior guidance released in April because of the stronger second quarter and higher services-led need for its products.
The company's quarterly profit surged by 60pc to $2bn from the prior-year period, while revenues grew by 21pc to $11bn in the same timeframe.
