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The surge in demand for engines during the summer travel season boosted GE Aviation's (GE.US) Q2 earnings.

AInvestTuesday, Jul 23, 2024 8:30 am ET
1min read

GE Aviation (GE.US), the world's largest jet engine manufacturer, reported its second-quarter earnings before the market opened on Tuesday. The data showed that GE Aviation's Q2 revenue was $9.1 billion, up 4% YoY and above consensus, and Q2 adjusted EPS was $1.20, above consensus of $0.98.

The strong demand in the summer travel season helped the company to deliver another stellar quarter. Orders and operating profit both grew double digits, with total orders of $11.2 billion, up 18% YoY, and operating profit of $1.9 billion, up 37% YoY. Free cash flow also grew significantly, reaching $1.1 billion, up $20 million YoY.

What is more important, the company is facing the persistent supply chain disruption in aerospace, while it is also dealing with the strong demand for maintenance and spare parts to keep existing jet aircrafts flying. The company responded that it is accelerating actions to address the supply chain constraints of the top 15 suppliers through the use of Flight Deck and deploying engineering and supply chain resources, where most of the suppliers have made progress.

Moreover, at the recent Farnborough Air Show, the company won orders from British Airways and Japan Airlines and achieved four widebody aircraft orders.

With the strong performance in the first half and the enhanced pricing power, the company raised its full-year guidance. It expects EPS to be between $3.95 and $4.20 per share, up from $3.80-$4.05 per share, and expects free cash flow to be between $5.3 billion and $5.6 billion, up from above $5 billion.

In April 2014, GE Aviation was spun off from GE's former energy-related business and became an independent company, which was previously called GE Vernova. The long and painful breakup process led by Larry Culp, the CEO of General Electric, ended, and General Electric transformed from a struggling conglomerate to a pure commercial and military jet engine manufacturer.

As of the time of writing, the stock was up 3.52% to $168.49. The stock has risen more than 60% this year, the largest among the aerospace and defense companies in the S&P 500 index so far.

In addition, earlier this month, the company's board extended Larry Culp's tenure as CEO to at least 2027, putting an end to speculation that he might be a candidate for the CEO of Boeing (BA.US).

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