GE Aerospace Financial Model
Aerospace and Defence Company Financials Example (Free Excel Download)
GE Aerospace is a global leader in the design, production, and maintenance of commercial and military aircraft engines and integrated systems.
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About this model
This model evaluates the equity valuation and free cash flow generation of GE Aerospace as a standalone pure-play aviation business, focusing on the profitability shift between lower-margin engine deliveries and high-margin aftermarket services.
GE Aerospace is a global leader in the design, production, and maintenance of commercial and military aircraft engines and integrated systems. Following the spin-off of GE HealthCare in 2023 and GE Vernova in April 2024, the company operates exclusively as a pure-play aerospace entity.
The business is divided into two primary segments: Commercial Engines & Services (CES), which contributes approximately 75 percent of total revenue, and Defense & Propulsion Technologies (DPT), which contributes the remaining 25 percent. The company operates globally, with significant revenue derived from North America, Europe, and Asia-Pacific. GE Aerospace employs a classic installed-base business model: it sells aircraft engines (equipment) at lower margins to build a massive installed base, which then generates highly profitable, long-term recurring revenue through maintenance, repair, and overhaul (MRO) services.
Competitively, GE Aerospace is a market leader, particularly in the narrowbody segment through its 50/50 CFM International joint venture with Safran (producing the LEAP engine), and in the widebody segment with proprietary engines like the GEnx and GE9X. The most significant recent corporate event was the completion of the GE Vernova spin-off on 2 April 2024, which finalised the dissolution of the historical General Electric conglomerate and established GE Aerospace as an independent, focused aviation company.
The downloadable GE Aerospace financial model includes SEC-sourced historical financials, forecast assumptions, core operating schedules, and valuation outputs in an Excel workbook built for review and scenario analysis.
A turnkey financial model
Live formulas, no hardcoded values
Outputs are driven by live formulas, so the workbook updates from its assumptions instead of relying on hardcoded results.
All assumptions in one tab
Inputs are clearly marked in the Assumptions tab and separated from calculations, making it clear what to change and what to leave intact.
Statements always balancing
For integrated-statement models, the balance sheet, cash flow, and supporting schedules tie through properly.
Distinct schedules for clarity
Debt, working capital, taxes, and cash flow can get messy quickly. We group calculations in clear schedules, not across disconnected tabs.
No hidden macros or external links
There are no unexplained external workbook links or macros to undermine auditability or portability.
Changes flow through the model
Update a key driver and see the impact carry through the forecast, financing, and return outputs. We never use hardcoded numbers in formulas.
Historicals & AssumptionsGE Aerospace financial modelCompany, Historicals & Assumptions used
Source: SEC EDGAR · values in USD
| Line item | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| Revenue | $56.47B | $29.14B | $35.35B | $38.70B | $45.85B |
| Research and development | $2.50B | $2.81B | $1.91B | $1.29B | $1.58B |
| Selling, general and administrative expenses | $11.71B | $12.78B | $9.20B | $4.44B | $4.09B |
| Net income | -$6.34B | $336.0M | $9.48B | $6.56B | $8.70B |
Forecast assumptions
Defaults used in the downloadable model. Forecast horizon: FY2026–FY2030.
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How to build a detailed financial model for GE Aerospace
A complete walkthrough of every driver, margin, working-capital input, and capital-allocation assumption used in the downloadable model.
Revenue Deep Dive
Commercial Engines & Services (CES)
- Segment name: Commercial Engines & Services
- Revenue driver formula: (Commercial Engine Deliveries x Average Selling Price) + (Active Installed Base x Shop Visit Rate x Revenue per Shop Visit) + Spare Parts Sales
- Historical growth rate: 20 to 24 percent year-over-year in recent periods (FY2025 revenue was $33.3 billion).
- Key growth levers and headwinds: Growth is driven by the ongoing ramp-up of LEAP engine production, global commercial flight hours, and the retirement cycle of older aircraft. Headwinds include aerospace supply chain bottlenecks, raw material shortages, and negative initial margins on new engine platforms like the GE9X.
- Pricing dynamics: Services are heavily driven by Long-Term Service Agreements (LTSAs) where customers pay based on flight hours, alongside spot-market Time and Materials (T&M) contracts.
- Revenue recognition notes: LTSA revenue is recognised over time based on the cost-to-cost method, creating significant contract assets on the balance sheet when revenue recognised exceeds customer billings.
- Seasonality: The fourth quarter is typically the strongest for equipment deliveries and cash collections.
Defense & Propulsion Technologies (DPT)
- Segment name: Defense & Propulsion Technologies
- Revenue driver formula: (Military Engine Deliveries x Average Selling Price) + (Service Contracts x Completion Percentage)
- Historical growth rate: 9 to 13 percent year-over-year (FY2025 revenue was $10.6 billion).
- Key growth levers and headwinds: Driven by US Department of Defense budgets, foreign military sales, and demand for rotorcraft and combat engines. Headwinds include government budget continuing resolutions and fixed-price contract inflation risks.
- Pricing dynamics: A mix of cost-plus and fixed-price government contracts.
- Revenue recognition notes: Revenue is generally recognised over time as costs are incurred on long-term government contracts.
- Seasonality: Government fiscal year-end dynamics often drive a surge in orders during the third calendar quarter.
Cost Structure
Variable Costs / COGS
- COGS includes direct manufacturing labour, raw materials (such as titanium and advanced nickel alloys), overhead, and warranty provisions.
- Gross margins are highly dependent on the mix between equipment and services. Equipment gross margins are often low or negative during the early years of a new engine programme (e.g., GE9X), while services gross margins are substantially higher.
- Input costs are exposed to global commodity prices and supply chain inflation, though LTSAs often include escalation clauses to mitigate this risk.
- COGS scales non-linearly with revenue due to the steep learning curve in aerospace manufacturing; unit costs drop significantly as cumulative production volume increases.
Operating Expenses
- R&D: Significant investment is required for next-generation propulsion (e.g., the CFM RISE programme). A portion of development costs is capitalised, while the remainder is expensed directly.
- SG&A: Includes corporate overhead, sales, and marketing. Following the spin-offs, corporate costs have been right-sized for a standalone aerospace business.
- Depreciation & Amortisation: Driven by heavy investments in manufacturing facilities, hypersonics test infrastructure, and MRO tooling.
- Restructuring / one-time charges: Historically high during the conglomerate break-up, but expected to normalise as a standalone entity.
Margin Profile
- Segment Margins: CES operates at a very high margin, reporting approximately 26.7 percent operating margin in FY2025. DPT operates at a lower, more stable margin of approximately 12.2 percent.
- Consolidated Margins: The consolidated adjusted operating margin was 21.4 percent in FY2025.
- Margin trend: Margins are expanding due to a higher mix of highly profitable shop visits and spare parts sales, offsetting the dilutive impact of new equipment deliveries.
Balance Sheet Structure
- Total assets: Dominated by contract assets, inventory, and property, plant, and equipment (PP&E).
- Contract Assets: A critical line item representing unbilled revenue from LTSAs. As engines fly and generate revenue under power-by-the-hour contracts, GE recognises revenue before billing the customer, building this asset.
- Inventory: Highly material. Work-in-progress inventory builds significantly ahead of major engine delivery ramps.
- Working capital profile:
- Days Sales Outstanding (DSO): Typically 40 to 50 days.
- Days Inventory Outstanding (DIO): High, often exceeding 100 days due to long manufacturing lead times.
- Days Payable Outstanding (DPO): Managed aggressively to preserve cash.
- Net working capital is often a use of cash during periods of high equipment production growth.
- PP&E: Consists of global manufacturing plants, testing facilities, and MRO shops.
- Investments: Includes the carrying value of the 50 percent stake in the CFM International joint venture.
Capital Expenditure & Investment
- Capex as % of revenue: Typically runs between 2.0 and 3.0 percent of total revenue.
- Maintenance vs. growth: The majority of current capex is growth-oriented, funding capacity expansions for LEAP engine production and new hypersonics testing infrastructure.
- Capitalised software / development: Material capitalisation of engineering and development costs for new engine architectures.
- M&A pattern: Currently focused on organic growth and returning capital to shareholders rather than large-scale acquisitions.
Debt & Capital Structure
- Total debt: The company significantly deleveraged its balance sheet using proceeds from the HealthCare and Vernova spin-offs.
- Credit rating: Investment grade, reflecting the strong cash generation of the aftermarket services business.
- Key debt instruments: Standard corporate bonds and revolving credit facilities.
- Interest rate profile: Predominantly fixed-rate long-term debt.
- Share repurchase programme: Highly active. The company executed $7.4 billion in share repurchases in FY2025.
- Dividend policy: The company pays a regular dividend, with increases subject to board approval, though the yield remains relatively low compared to the buyback yield.
Cash Flow Characteristics
- Operating cash flow conversion: Exceptionally strong. Free cash flow conversion (FCF divided by Adjusted Net Income) exceeded 110 percent in FY2025.
- Free cash flow margin: Approximately 16 to 17 percent of revenue (FY2025 FCF was $7.7 billion on $45.9 billion in revenue).
- Major non-cash items: Depreciation, amortisation, and the net change in contract assets.
- Working capital cash flow impact: Inventory builds act as a headwind to cash flow, while contract asset dynamics and strong customer advances provide offsets.
- Capex intensity: Relatively low capital intensity compared to the massive revenue base, enabling high free cash flow generation.
Sheet Structure
- Assumptions: Hardcoded inputs for macroeconomic drivers, segment growth rates, margin targets, and capital allocation policies.
- Scenarios: Toggle for Base, Bull, and Bear cases affecting flight hours, engine delivery volumes, and supply chain constraints.
- Income Statement: Consolidated P&L from Revenue down to Net Income and EPS, reflecting the standalone aerospace business.
- Balance Sheet: Assets, Liabilities, and Shareholders' Equity, with specific breakouts for Contract Assets and Inventory.
- Cash Flow Statement: Operating, Investing, and Financing cash flows, bridging Net Income to Free Cash Flow.
- Revenue & Segment Build: Detailed build for CES (Equipment vs. Services) and DPT (Equipment vs. Services), driven by volume and pricing assumptions.
- Working Capital & Contract Assets: Schedules calculating DSO, DIO, DPO, and the roll-forward of long-term service agreement contract assets.
- Depreciation, Amortisation & Capex: PP&E roll-forward and capital expenditure forecasting.
- Debt & Interest: Debt schedule detailing maturities, interest expense calculations, and debt paydown.
- Shareholders' Equity & Shares: Retained earnings roll-forward, dividend payments, and dynamic share count reduction from the buyback programme.
- DCF Valuation: Unlevered free cash flow calculation, WACC derivation, terminal value, and implied share price.
Key Financial Relationships
- CES Equipment Revenue = Commercial Engine Deliveries x Average Selling Price per Engine
- CES Services Revenue = Active Commercial Installed Base x Shop Visit Rate x Average Revenue per Shop Visit
- Total CES Revenue = CES Equipment Revenue + CES Services Revenue
- DPT Equipment Revenue = Military Engine Deliveries x Average Selling Price
- DPT Services Revenue = Military Installed Base x Service Contract Realisation Rate
- Total DPT Revenue = DPT Equipment Revenue + DPT Services Revenue
- Consolidated Revenue = Total CES Revenue + Total DPT Revenue
- CES Operating Profit = Total CES Revenue x CES Operating Margin
- DPT Operating Profit = Total DPT Revenue x DPT Operating Margin
- Total Segment Profit = CES Operating Profit + DPT Operating Profit
- Adjusted Operating Profit = Total Segment Profit - Corporate & Other Unallocated Costs
- Contract Asset Balance = Prior Period Contract Asset + Services Revenue Recognised - Billings to Customers
- Free Cash Flow = Cash from Operating Activities - Purchases of Property, Plant, and Equipment
- Ending Share Count = Beginning Share Count - (Share Repurchase Programme Spend / Average Share Price)
Cross-Sheet Dependencies
The Assumptions sheet dictates the volume and pricing inputs on the Revenue & Segment Build sheet. The outputs from the segment build feed directly into the top line of the Income Statement. Segment profitability drives Net Income, which flows into the top of the Cash Flow Statement. The Working Capital & Contract Assets sheet calculates the changes in operating assets and liabilities, which are critical for bridging Net Income to Operating Cash Flow. The Cash Flow Statement determines the cash available for share repurchases, which feeds the Shareholders' Equity & Shares sheet to reduce the share count. This reduced share count loops back to the Income Statement to calculate EPS. A potential circularity exists if interest income on cash balances is modelled, as cash depends on net income, which depends on interest income.
Sign Convention
- Revenue and Assets: Modelled as positive numbers.
- Expenses and Liabilities: Modelled as positive numbers in their respective supporting schedules, but subtracted in aggregation formulas (e.g., Gross Profit = Revenue - COGS).
- Cash Flow: Cash inflows are positive; cash outflows (including capex, dividends, and share repurchases) are negative.
- Working Capital: An increase in an asset (like inventory) is a negative cash flow; an increase in a liability (like accounts payable) is a positive cash flow.
Things Most Likely to Go Wrong
- Historical financials prior to Q2 2024 include GE Vernova and GE HealthCare; the model must strictly use restated continuing operations data for the pure-play aerospace business.
- The mix between equipment and services heavily dictates gross margins; a surge in new engine deliveries (like the GE9X) will dilute consolidated margins due to negative initial equipment margins.
- Contract assets represent unbilled revenue from long-term service agreements; failing to model the working capital drag of growing contract assets will overstate near-term cash flow.
- The CFM International joint venture with Safran is accounted for uniquely; the model must capture GE's 50 percent share of LEAP engine economics correctly within CES revenue and costs.
- Spare engine ratios fluctuate year-to-year; assuming a constant spare engine attachment rate will lead to inaccurate equipment revenue forecasts.
- R&D capitalisation rules under US GAAP mean that a portion of development costs for new programmes sits on the balance sheet; expensing all R&D will understate operating profit.
- Corporate and unallocated costs run at a material level annually; calculating consolidated operating profit based solely on segment margins will overstate earnings.
- Inventory builds are required ahead of major production ramps; the model must link inventory days on hand to forward 12-month equipment revenue, not historical revenue.
- Share repurchases are a massive driver of EPS growth ($7.4 billion in 2025); the model must dynamically reduce the share count to accurately forecast per-share metrics.
Validation Checks
- CES operating margin should remain in the 25 to 28 percent range; flag if it drops below 20 percent or exceeds 30 percent.
- DPT operating margin should remain in the 10 to 14 percent range based on historical government contract profitability.
- Free cash flow conversion (FCF divided by Adjusted Net Income) should consistently exceed 100 percent due to contract asset dynamics and high-margin services.
- Total revenue growth should not exceed 20 percent annually without a flagged justification, given supply chain constraints and production capacity limits.
- Capex as a percentage of revenue should remain between 2.0 and 3.5 percent; flag if it falls outside this maintenance and growth band.
- The effective tax rate should be modelled between 19 and 22 percent; flag if it deviates significantly from this historical range.
- Balance sheet check: Total Assets must exactly equal Total Liabilities plus Shareholders' Equity in every forecast period.
- Share count reduction should not exceed the board-authorised buyback limits or available free cash flow after dividends.
Key Assumptions (Default Values)
| Assumption | Default Value | Unit | Rationale |
|---|---|---|---|
| CES Revenue Growth | 12.0 | % | Blended growth of LEAP deliveries and strong aftermarket shop visits based on 2025-2026 guidance. |
| DPT Revenue Growth | 7.0 | % | Mid-single-digit growth driven by US DoD budgets and international military sales. |
| CES Operating Margin | 26.7 | % | Actual reported CES margin for FY2025, reflecting high-margin services mix. |
| DPT Operating Margin | 12.2 | % | Actual reported DPT margin for FY2025, reflecting cost-plus contract structures. |
| Corporate & Other Costs | 1,000 | $ Millions | Estimated annual unallocated corporate overhead for the standalone aerospace entity. |
| Effective Tax Rate | 20.0 | % | Management guidance for the standalone US-domiciled aerospace business. |
| Capex as % of Revenue | 2.5 | % | Historical average required to support manufacturing capacity and hypersonics testing. |
| Share Repurchases | 7,400 | $ Millions | Matches the aggressive capital return programme executed in FY2025. |
| Dividend Yield | 0.9 | % | Approximate yield based on recent post-spin dividend declarations. |
| Discount Rate (WACC) | 8.5 | % | Standard aerospace prime contractor cost of capital. |
| Terminal Growth Rate | 2.5 | % | Long-term global air traffic and GDP growth proxy. |
Data Sources & Benchmarks
- Filings: SEC EDGAR (Form 10-K, Form 10-Q, Form 8-K) and the GE Aerospace Investor Relations portal.
- Key Peers: RTX Corporation (RTX - Pratt & Whitney), Rolls-Royce Holdings plc (RYCEY), and Safran SA (SAF.PA).
- Industry Data: International Air Transport Association (IATA) for global passenger flight hours; US Department of Defense budget requests for military procurement trends.
- Consensus Estimates: Visible Alpha or Bloomberg for forward-looking analyst estimates on engine deliveries and shop visits.
Sources
- GE Aerospace 2024 Annual Report and 10-K: https://www.geaerospace.com/investor-relations
- GE Aerospace Q4 and Full Year 2025 Earnings Release (Form 8-K): https://www.sec.gov
- S&P Global Market Intelligence: GE Aerospace set for 2025 revenue surge on shipment recovery
- Trefis: GE Aerospace Revenues: How Does GE Make Money?
- Matrix BCG: How Does General Electric Company Work?
Do more with the GE Aerospace model
Frequently asked
What is GE Aerospace's primary business model after its spin-offs?+
GE Aerospace operates as a pure-play aviation business, focusing on the design, production, and maintenance of commercial and military aircraft engines and integrated systems. Its core strategy involves selling lower-margin engines to build an installed base, which then generates highly profitable, long-term recurring revenue from aftermarket services.
How does GE Aerospace generate its revenue, and what are its key segments?+
GE Aerospace generates revenue primarily through the sale of aircraft engines and, more significantly, through high-margin maintenance, repair, and overhaul (MRO) services for its installed engine base. Its business is divided into Commercial Engines & Services, contributing about 75% of total revenue, and Defense & Propulsion Technologies, making up the remaining 25%.
What is a key assumption regarding GE Aerospace's revenue growth in the financial model?+
A key assumption in the financial model for GE Aerospace is a revenue growth rate of approximately 17.11%. This growth is expected to be driven by both engine deliveries and the highly profitable aftermarket services.
What is the main purpose of the GE Aerospace financial model?+
The GE Aerospace financial model is designed to evaluate the company's equity valuation and its capacity for free cash flow generation. It specifically analyzes the shift in profitability from lower-margin engine deliveries to higher-margin aftermarket services.
What is the typical capital expenditure profile for GE Aerospace?+
The financial model assumes GE Aerospace's capital expenditure as a percentage of revenue is approximately 8.53%. Historically, this figure typically runs between 2.0% and 3.0% of total revenue, with the majority of current capex being growth-oriented, funding capacity expansions for engine production and new testing infrastructure.
Can I download an Excel financial model for GE Aerospace, and what is its forecast horizon?+
Yes, an Excel financial model for GE Aerospace is available for download. This model provides a forecast horizon spanning from fiscal year 2026 through fiscal year 2030.
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