GE Aerospace's Margin Expansion and 2028 Outlook: A Structural Tailwind for Shareholder Value

The aerospace industry is undergoing a transformative phase, driven by the relentless demand for air travel, the modernization of global fleets, and the urgent need for sustainable propulsion solutions. At the heart of this evolution lies GE Aerospace, a company that has not only navigated the challenges of its 2024 spin-off from General Electric but has also emerged as a dominant force in engine innovation and service excellence. Its accelerating margin expansion and ambitious 2028 profit outlook reflect a strategic alignment with the sector's structural tailwinds, positioning it as a compelling long-term investment.

A Decade of Margin Expansion: The Numbers Tell the Story

GE Aerospace's financial performance since 2023 has been nothing short of extraordinary. By 2025, the company had achieved a 250-basis-point expansion in operating profit margins, reaching 26.2%, despite the operational complexities of becoming a standalone public entity. This margin resilience is underpinned by a combination of pricing power, cost discipline, and the scalability of its service businesses. For instance, the Commercial Engines & Services (CES) segment, which accounted for 78% of total revenue in Q2 2025, delivered 30% year-over-year revenue growth and 33% operating profit growth. Such figures are not anomalies but the result of a business model that balances high-margin recurring service revenue with the cyclical demand for new engine sales.

The company's operating margin profile, while slightly easing to 23% in Q2 2025, remains robust given the rising costs of raw materials and supply chain bottlenecks. Notably, GE Aerospace's free cash flow has consistently outpaced expectations, with $5.2 billion in 2023 and $2.1 billion in Q2 2025 alone. This liquidity has enabled aggressive shareholder returns—$6 billion through buybacks and dividends in 2024—while simultaneously funding R&D in next-generation technologies.

Structural Tailwinds: From GE9X to RISE

The aerospace sector's long-term growth is being propelled by three structural forces: the expansion of air travel in emerging markets, the retirement of legacy aircraft, and the push for decarbonization. GE Aerospace is uniquely positioned to capitalize on all three.

1. GE9X and the Widebody Revival
   The GE9X engine, designed for Boeing's 777X, is a testament to GE's engineering prowess. After years of delays tied to the 777X certification process, the engine is now entering service in 2026. With a record $400 million order from Qatar Airways, the GE9X is set to become a cornerstone of GE Aerospace's widebody strategy. While near-term costs will weigh on profitability, the engine's high unit prices and long-term service contracts—akin to the LEAP program's trajectory—will drive margin expansion in the 2030s.

2. LEAP's Break-Even and Beyond
   The LEAP engine, powering the Airbus A320neo and Boeing 737 MAX, has already become the most successful narrowbody engine in history. With over 9,000 units in operation, the program is now breakeven and set to deliver rising margins as durability improvements reduce maintenance costs. The introduction of upgraded high-pressure turbine (HPT) blades, for example, has extended time-on-wing intervals, directly enhancing profitability.

3. GEnx and the 787 Fleet Dominance
   The GEnx engine, which powers 60% of the global Boeing 787 fleet, has achieved a 90% win rate on recent 787 engine selections. Its reliability—enabling some engines to operate for five years between shop visits—has cemented its market leadership. This durability not only strengthens customer loyalty but also creates a recurring revenue stream from parts and service.

4. RISE and the Future of Sustainable Aviation
   GE's RISE (Revolutionary Innovation for Sustainable Engines) program, based on an unducted open fan architecture, is a forward-looking bet on decarbonization. While still in development, RISE is expected to reduce fuel burn by 20% compared to current engines, aligning with global regulatory trends. Though commercialization is a decade away, the program positions GE to dominate the next generation of efficient, low-emission propulsion systems.

The 2028 Outlook: A $11.5 Billion Operating Profit Milestone

GE Aerospace's 2028 profit target of $11.5 billion—$1.5 billion above its previous guidance—reflects the compounding effects of its structural advantages. The company anticipates that operating profit growth will accelerate from the mid-teens in 2025 to over 10% annually through 2028, driven by:
- Scale in Service Businesses: Service revenue, which accounts for 40% of total revenue, is expected to grow at a 15% CAGR, outpacing the 10% growth in new engine sales.
- Cost Efficiency: The FLIGHT DECK operating system has improved supplier execution to 95% compliance, reducing production bottlenecks and inflationary pressures.
- R&D Payoff: $2.7 billion in 2024 R&D spending is now translating into tangible innovations, such as hybrid-electric propulsion demonstrators and hypersonic engine prototypes.

Even with near-term headwinds—such as $500 million in 2025 tariff-related costs—GE's free cash flow is projected to exceed $6.5 billion in 2025 and reach $9 billion by 2028. This liquidity will fund both strategic investments and shareholder returns, with the company targeting a 60% free cash flow payout ratio by 2026.

Investment Implications: A Long-Term Play on Structural Growth

For investors, GE Aerospace represents a rare combination of near-term margin resilience and long-term innovation. The company's ability to monetize structural trends—such as the shift to widebody aircraft and the decarbonization imperative—ensures that its margins will remain insulated from cyclical downturns. Moreover, its R&D-driven product pipeline (RISE, Open Fan, and hybrid-electric propulsion) creates a moat against competitors like Rolls-Royce and Pratt & Whitney.

However, risks persist. The GE9X's near-term unprofitability and the pace of RISE's development could delay margin expansion. Additionally, geopolitical tensions and regulatory shifts in emissions standards may alter the cost structure. Yet, these are long-term considerations for a company with a 150-year history of technological leadership.

Conclusion: A Structural Winner in a High-Growth Sector

GE Aerospace's margin expansion and 2028 profit outlook are not merely the result of operational excellence but a reflection of its alignment with the aerospace sector's enduring megatrends. For patient investors, the company offers a compelling opportunity to participate in a business that is redefining the economics of flight—both in terms of efficiency and profitability. As the world's air networks grow and sustainability becomes a regulatory imperative, GE Aerospace stands as a beacon of innovation and shareholder value creation.