GE Aerospace reported third-quarter 2026 results on Tuesday, October 20, before the open. Orders: $19.0 billion, up 49%, and revenue rose 16% to $14.12 billion. The company raised its full-year guidance across every line. But free cash flow in the quarter itself fell 14%, and GAAP margin declined - and the stock closed down 3.67%.
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What was reported
| Q3 2026 | Q3 2025 | Change | |
|---|---|---|---|
| Orders | $19.0 billion | +49% | |
| GAAP revenue (millions of dollars) | 14,118 | 12,181 | +16% |
| Adjusted revenue | 13,285 | 11,305 | +18% |
| GAAP profit | 2,805 | 2,515 | +12% |
| GAAP profit margin | 19.9% | 20.7% | -80 bps |
| Adjusted operating profit | 2,988 | 2,299 | +30% |
| Adjusted operating margin | 22.5% | 20.3% | +220 bps |
| GAAP continuing EPS | $2.32 | 2.04 | +14% |
| Adjusted EPS | $2.25 | 1.66 | +36% |
| Cash from operating activities | 2,203 | 2,556 | -14% |
| Free cash flow | 2,042 | 2,362 | -14% |
Source: GE Aerospace's third-quarter 2026 press release, October 20, 2026, filed with the SEC on Form 8-K as Exhibit 99. "Adjusted" and free cash flow are non-GAAP measures.
Note two pairs moving in opposite directions.
The first - margins. On a GAAP basis they fell 80 basis points, to 19.9%; on the adjusted measure they rose 220 basis points, to 22.5%. The difference between the two lines is the adjustments the company excludes, and the release does not itemise them in the highlights section.
The second - cash flow. In the quarter itself, cash from operations and free cash flow both fell 14%. But year to date both rose - operating cash flow 14% and free cash flow 13%. So the quarterly decline is not the nine-month trend, but a single quarter's movement.
The two segments
| Revenue | Change | Operating profit | Change | |
|---|---|---|---|---|
| Commercial Engines & Services | 10,342 | +21% | 2,887 | +21% |
| Defense & Propulsion Technologies | 3,469 | +7% | 475 | +8% |
| Corporate costs and eliminations | (373) | improved from (525) | ||
| Total adjusted | 13,285 | +18% | 2,988 | +30% |
In millions of dollars. The sum of segment revenue is higher than adjusted revenue because of eliminations and other items.
Commercial engines are the engine: $10.3 billion - about 78% of adjusted revenue - and growth of 21% in both revenue and profit. Defense grows more slowly, 7% in revenue and 8% in profit.
And one line that adds to profit without being a business: corporate costs and eliminations improved to $(373) million, from $(525) million - an improvement of $152 million, which is about 22% of the increase in adjusted operating profit.
Within the commercial business, the company reports that commercial services revenue rose 23%, and that revenue from the LEAP engine family grew 26%. Year to date, according to the company, commercial services revenue and total engine deliveries both rose by more than 20%.
The orders, and the backlog
Orders jumped 49% to $19.0 billion - the sharpest rate in the report. A substantial part of it is explained by identifiable events:
- At the Farnborough airshow the company signed commitments for more than 1,800 engines, including the largest LEAP-1A agreement in its history: more than 1,000 engines with IndiGo.
- In October it signed an agreement with Turkish Airlines for more than 300 LEAP-1B engines, plus a long-term services agreement covering its entire LEAP-1B fleet - more than 600 engines.
- In defense it signed a contract worth up to $2.9 billion for ongoing support of the F414 engines powering the U.S. Navy's F/A-18 and EA-18G fleets.
According to the company, the commercial services backlog stands at more than $170 billion, and it expects commercial services revenue to grow at a low-double-digit rate in 2027.
Guidance, raised across the board
| 2025 actual | Prior 2026 guide | Updated guide | |
|---|---|---|---|
| Adjusted revenue growth | +21% ($42.3 billion) | High-teens | ~19% to 20% |
| Operating profit | $9.1 billion (21.4% margin) | $10.55 - $10.75 billion | $10.9 - $11.0 billion |
| Adjusted earnings per share | $6.37 | $7.65 - $7.85 | $8.00 - $8.10 |
| Free cash flow | $7.7 billion (113% conversion) | $8.9 - $9.2 billion | $9.1 - $9.4 billion |
This is a real and broad raise: the midpoint of the operating profit range rose from $10.65 billion to $10.95 billion, the earnings per share midpoint from $7.75 to $8.05, and the free cash flow midpoint from $9.05 billion to $9.25 billion. The company also states that free cash flow conversion will exceed 100%.
On the investment side: the company signed an agreement to acquire Consolidated Precision Products (CPP) to expand capacity for mission-critical castings, and is investing more than $3 billion a year in research and development. It also completed, together with NASA, BETA Technologies and Boeing, the world's first hybrid electric flight above 30,000 feet.
The stock
The report was published before the open on Tuesday, so the trading reaction is that same day, October 20. The stock closed at $299.87, down 3.67% from the prior close of $311.28. It opened at $302.23, rose as high as $307.36 and fell as low as $294.22. Volume: 9.2 million shares, versus 5.1 million the day before.
הזווית שלי
דעה אישית של אילן אברמוב - לא ייעוץ ולא המלצה
This report is strong in the backlog and the guidance, and weak in one place I find hard to ignore.
What is strong, and unmistakably so: orders of $19.0 billion, up 49%, are not noise. They have names - IndiGo, Turkish Airlines, the F414 contract - and a commercial services backlog of more than $170 billion is revenue that spreads over years and does not depend on delivering a new engine. In this business the service is the profit, and the backlog is what secures it. And guidance was raised on all four lines - not narrowed, not maintained, raised.
And what troubles me: free cash flow in the quarter fell 14%, while adjusted operating profit rose 30%. That is a 44-percentage-point gap between two lines that should move together. Year to date cash flow actually rose 13%, so I would not call it a trend - but when a company reports a 49% jump in orders, part of the cash is absorbed by working capital: inventory and materials that must be bought before the engine is delivered. That decline makes sense precisely because orders jumped - which is also what makes it a figure to follow rather than dismiss.
And two more things I would read carefully. First, GAAP margin fell 80 basis points while the adjusted margin rose 220 - a 300 basis point gap the release does not break down in the highlights. Second, about 22% of the increase in adjusted operating profit comes from an improvement in corporate costs and eliminations, not from the segments. That is a real improvement, but it is more one-off in character than selling engines.
What I will follow: fourth-quarter free cash flow against the new $9.1 billion to $9.4 billion guidance - which requires a very strong fourth quarter after nine months of $6.73 billion.
(To be clear: this is my personal opinion only. Nothing here is a recommendation to take any action, and there is no forecast here of the price of any security.)
Ilan Abramov, the author, or anyone on his behalf may hold some of the securities or funds mentioned in this article.
