GE Aerospace (GE) shares fell in Tuesday's premarket trading despite the company reporting better-than-expected third-quarter results and raising its 2026 outlook.

The decline came as investors weighed lower free cash flow, narrower Commercial Engines & Services margins and uncertainty surrounding GE9X engine certification.

Revenue rose 16% year over year to $14.118 billion, beating the analyst estimate of $12.849 billion. Adjusted revenue increased 18% to $13.285 billion.

Adjusted earnings climbed 36% to $2.25 per share, beating the $2.00 consensus estimate.

Commercial Engines & Services Drives Growth

GAAP profit rose 12% to $2.805 billion, while adjusted operating profit jumped 30% to $2.988 billion. Adjusted operating margin expanded 220 basis points to 22.5%.

Orders surged 49% to $19 billion.

Commercial Engines & Services revenue and operating profit each increased 21%, reaching $10.342 billion and $2.887 billion, respectively. However, the segment's operating margin narrowed 10 basis points to 27.9%.

Services revenue grew 17%, supported by a 12% increase in internal shop visit revenue, driven by higher volume and heavier maintenance work. LEAP shop visits rose more than 40%, while spare parts sales increased over 20%.

Equipment revenue jumped 38% as engine deliveries increased 8%, including 5% growth in LEAP deliveries.

Meanwhile, GE Aerospace has delivered GE9X engines with upgraded midseals to Boeing Company (BA) since August. The company is targeting FAA certification of the upgraded midseal by the end of 2026, subject to regulatory approval.

Defense Business Expands As Backlog Strengthens

Defense & Propulsion Technologies revenue increased 7% to $3.469 billion. Operating profit rose 8% to $475 million, with a margin of 13.7%.

Defense & Systems revenue grew 5%, while Propulsion & Additive Technologies revenue increased 10%.

Year-to-date commercial services revenue and engine deliveries each grew more than 20%.

GE Aerospace reported a commercial services backlog exceeding $170 billion and expects low-double-digit services revenue growth in 2027.

The company also secured more than 1,800 engine commitments at Farnborough, won a defense support contract worth up to $2.9 billion and announced plans to acquire Consolidated Precision Products.

GE Aerospace Raises 2026 Earnings Outlook

GE Aerospace raised its 2026 adjusted earnings guidance to $8.00 to $8.10 per share from $7.65 to $7.85, above the $7.92 analyst estimate.

The company also increased its adjusted revenue growth forecast to approximately 19% to 20%.

Management raised its adjusted operating profit outlook to $10.9 billion to $11 billion and free cash flow guidance to $9.1 billion to $9.4 billion.

However, quarterly operating cash flow declined 14% to $2.203 billion, while free cash flow fell 14% to $2.042 billion.

GE Aerospace ended the quarter with $8.8 billion in cash and $19.3 billion in borrowings. It also repurchased $2 billion of shares.

Management Highlights Engine Recovery and GE9X Progress

During the earnings call, management said the number of aircraft grounded because of LEAP engine issues had fallen to nearly zero since the summer.

The company also reported record internal shop-visit output and shorter turnaround times. LEAP engine turnaround times have improved by two weeks since the end of 2025.

Chairman and CEO Larry Culp said GE Aerospace continues to work closely with airlines to improve fleet availability. He expects aircraft departures to increase in 2027, supported by existing backlogs and previously flown engine cycles.

Meanwhile, GE Aerospace has delivered GE9X engines with upgraded midseals since August and is targeting Federal Aviation Administration certification by the end of 2026.

The company also reported increased GEnx engine deliveries to Boeing during the quarter, outpacing aircraft deliveries.

Culp described the planned acquisition of Consolidated Precision Products as an investment in critical casting capacity for the broader aerospace industry.

The deal is expected to strengthen manufacturing capabilities and support the development of next-generation engine components focused on durability, cooling and efficiency.

Stock Price Action

GE Aerospace shares fell 4.11% to $298.50 in Tuesday's premarket trading, according to market data.