RBC Capital raised the firm’s price target on FTAI Aviation (FTAI) to $350 from $270 and keeps an Outperform rating on the shares. Among the recent FTAI announcements, the recent CFM International partnership is perhaps the most strategically significant, and the firm believes FTAI is now positioned to exceed prior CFM56 expectations in terms of both revenues and margins, the analyst tells investors in a research note. The company should now be viewed as the leading non-OEM player in the CFM56 aftermarker, ...

Core Insights - FTAI Aviation's recent partnerships with Palantir and GE Aerospace are enhancing its growth prospects significantly [1][4][6] Company Overview - FTAI Aviation specializes in owning and maintaining aircraft engines for airlines, cargo companies, and leasing companies, providing a cost-effective solution for engine maintenance [2] - The company has a market capitalization of $30 billion and has seen its stock price increase by 219% over the past year [3][1] Strategic Partnerships - FTAI has established a multiyear strategic partnership with GE Aerospace, securing OEM replacement parts, thrust performance upgrades, and component repair services [4] - The partnership with Palantir focuses on utilizing AI technology to enhance production turnaround times and improve unit economics, aiming for cost savings for customers globally [6][8] Market Dynamics - GE Aerospace has extended the timeline for expected declines in CFM56 shop visits from 2025 to 2027 due to strong airline demand, benefiting FTAI [5] - FTAI Power, a new business unit, aims to convert CFM56 engines into power turbines for data centers, with a target of producing over 100 units annually [6][7] Financial Metrics - FTAI Aviation is currently trading at 43 times forward earnings, indicating a premium valuation, but the growth potential in both aircraft engine servicing and FTAI Power is substantial [8]

General Electric Company (NYSE:GE) Q4 2025 Earnings call January 22, 2026 07:30 AM ET Company ParticipantsRahul Ghai - CFODouglas Harned - Managing DirectorMyles Walton - Managing DirectorScott Deuschle - A&D Equity Research DirectorGavin Parsons - Director of Aerospace and Defense Equity ResearchJohn Godyn - Managing DirectorNoah Poponak - Managing DirectorBlaire Shoor - Head of Investor RelationsSeth Seifman - Executive DirectorLarry Culp - Chairman and CEOConference Call ParticipantsRon Epstein - Senior ...

General Electric Company (NYSE:GE) Q4 2025 Earnings call January 22, 2026 07:30 AM ET Company ParticipantsRahul Ghai - CFODouglas Harned - Managing DirectorMyles Walton - Managing DirectorScott Deuschle - A&D Equity Research DirectorGavin Parsons - Director of Aerospace and Defense Equity ResearchJohn Godyn - Managing DirectorNoah Poponak - Managing DirectorBlaire Shoor - Head of Investor RelationsSeth Seifman - Executive DirectorLarry Culp - Chairman and CEOConference Call ParticipantsRon Epstein - Senior ...

Summary of Key Points from the Conference Call Transcript Industry Overview - **Industry**: Aerospace & Defense Electronics, specifically focusing on the Commercial Aftermarket (AM) pricing dynamics [1][2] Core Insights 1. **Maintenance Cost Increases**: Maintenance costs have risen by 30-35% since 2021/2022, with expectations for continued momentum in the high single digits (MSD+) moving forward [1][4][21] 2. **Turnaround Times (TAT)**: TATs remain elevated at approximately 100-125 days, although some relief is being found through engine exchange programs [1][16][31] 3. **PMA and USM Advantages**: Parts Manufacturer Approval (PMA) and Used Serviceable Material (USM) are gaining traction due to their pricing advantages, with PMA parts sold at a 20-25% discount to Original Equipment (OE) list prices [3][5][10] 4. **Workscope Expansion**: Workscope expansions can lead to significant increases in service costs, with second shop visits (SVs) for GE90 engines being 60-70% heavier than first visits [4][22] 5. **Parts Inflation**: Parts inflation is shifting the market mix towards USM, with certain parts seeing price increases from ~$20K to ~$30-35K, representing a 63% rise [5][21] 6. **Contract Structures**: New contract structures are reallocating risk and unlocking savings, with OEMs absorbing non-maturity risks in early program Pay-By-Hour (PBH) contracts [6][21] 7. **Lease Rates and Scarcity**: Lease rates have increased by approximately 5-10% over the past year, driven by system-wide scarcity and elongating TATs [7][16][28] Additional Important Insights 1. **Market Growth**: The aftermarket is projected to grow by 8% in 2026, outpacing the International Air Transport Association (IATA) Revenue Passenger Kilometers (RPKs) growth of 6% [8] 2. **Expert Commentary**: PMA parts are noted to have gross margins of 50-70% for suppliers, indicating a lucrative market despite historical reluctance from lessors to adopt PMA due to lease return conditions [3][10][19] 3. **MRO Capacity Constraints**: The MRO (Maintenance, Repair, and Overhaul) capacity remains constrained, with shortages in USM and spare engines pushing costs higher and extending turnaround times [28][33] 4. **Platform-Specific Dynamics**: Different engine platforms such as CFM56, LEAP, and GTF are experiencing unique challenges, including durability issues and rising maintenance demands [41][42][43] 5. **Future Projections**: LEAP services revenues are expected to reach approximately $6.5 billion by 2028, up from around $3.2 billion in 2025, indicating strong growth potential in this segment [11][12] This summary encapsulates the key points discussed in the conference call, highlighting the current state and future outlook of the aerospace and defense aftermarket industry.

Core Viewpoint - The market initially misjudged the performance of GE Aerospace and GE Vernova, both of which reported strong earnings but experienced stock sell-offs before rebounding significantly. Group 1: GE Aerospace - GE Aerospace reported a remarkable 26% organic revenue growth, driven by strong performance in commercial engines, services, and defense sectors [3][6] - The commercial engines and services segment saw a 22% increase in equipment revenue and a 28% rise in services revenue, leading to a 35% growth in earnings for this division [6][7] - Management raised their full-year revenue growth forecast for commercial engines services from high teens to low 20s, indicating positive momentum [8] - Supply chain improvements were noted, with priority suppliers achieving over 95% of committed volumes for three consecutive quarters, contributing to a 40% year-over-year increase in Leap engine deliveries [9][11] - GE Aerospace is positioned to benefit from increased aircraft purchases due to trade dynamics, as evidenced by Korean Air's order for 103 aircraft that will include GE engines [13][14] Group 2: GE Vernova - GE Vernova reported strong organic revenue growth and a 15% year-over-year increase in backlog, reaching over $135 billion [15][16] - The company secured nearly $15 billion in new orders, reflecting robust demand for its products [15][16] - Management's acquisition of the remaining 50% of Prolle aims to enhance exposure to the electrification segment, which is expected to grow significantly [18][20] - The combined serviceable addressable market for GE Vernova is projected to expand at a 10% compound annual growth rate, potentially doubling by 2030 [20] - The company has repurchased $2.2 billion worth of its own stock this year and plans to continue buybacks, indicating confidence in its stock value [23]

Financial Data and Key Metrics Changes - Revenue grew 26% to $11.3 billion, with operating profit also up 26% to $2.3 billion, driven by strong deliveries across aftermarket, original equipment (OE), and defense [6][19] - Earnings per share (EPS) increased 44% to $1.66, supported by higher operating profit, a lower tax rate, and a reduced share count [20][30] - Free cash flow reached $2.4 billion, up 30% with over 130% conversion [20][30] Business Line Data and Key Metrics Changes - In Commercial Engines and Services (CES), orders were up 5%, with services orders up 32% and equipment orders down 42% due to timing [22] - CES revenue grew 27%, with services revenue up 28% and internal shop visit revenue up 33% [22][24] - In Defense and Propulsion Technologies (DPT), revenue grew 26%, with engines volume up 83% year over year [25][26] Market Data and Key Metrics Changes - Total orders increased 2% in the third quarter, with year-to-date orders up 13% and services orders up 31% [5] - The total DPT backlog reached $19 billion, up $1.5 billion year over year [25] Company Strategy and Development Direction - The company is focused on enhancing its operational model, Flight Deck, to improve delivery and meet robust customer demand [4][7] - Investments in LEAP durability and next-generation technologies are prioritized to deliver value to customers [6][15] - The company is raising its full-year guidance across the board, expecting revenue growth in the high teens and CES growth in the low 20s [28][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand for services and products, with a significant backlog of approximately $175 billion [7][8] - The company is optimistic about its trajectory entering 2026, with expectations for continued growth and improved operational performance [30][32] Other Important Information - The company is investing nearly $1 billion in its supply chain to expand capacity [12] - The LEAP third-party maintenance, repair, and overhaul (MRO) network is growing rapidly, with external shop visits up roughly twofold [12] Q&A Session Summary Question: Services outperformance and sequential step down in Q4 - Management noted strong services growth driven by improved material availability and increased work scopes, with expectations for a seasonal step down in Q4 due to typical demand patterns [37][41] Question: LEAP services margin outlook - Confidence in achieving LEAP services margin targets by 2028 is based on ongoing improvements in supply chain performance and operational efficiencies [46][50] Question: Capital deployment and M&A considerations - The company maintains a balanced capital allocation approach, prioritizing reinvestment in the business and returning capital to shareholders while remaining open to strategic M&A opportunities [53][57] Question: Spare parts performance and drivers - Spare parts growth is attributed to pent-up demand, increased work scopes, and improved material availability, with expectations for continued growth in 2026 [61][66] Question: 2026 revenue growth and margin expectations - The environment for 2026 appears better than previously expected, with projected revenue growth and profit growth, although not at the same levels as 2025 [69][72] Question: Defense business and R&D insights - The defense business is leveraging commercial experience to enhance development cycles and sustainment models, with significant investments in next-generation platforms [79][82] Question: Durability of LEAP-1A blade - Initial performance of the LEAP-1A durability kit is promising, with expectations for a multi-year rollout across the installed base [86][88] Question: Supply chain material availability improvements - Improvements in supply chain material availability are the result of cumulative efforts and collaboration with suppliers, focusing on problem-solving and operational efficiency [92][95]

Financial Data and Key Metrics Changes - Revenue for the third quarter was $11.3 billion, up 26% year-over-year, with operating profit also increasing by 26% to $2.3 billion [15][19] - Earnings per share (EPS) grew 44% to $1.66, driven by increased operating profit, a lower tax rate, and a reduced share count [15][19] - Free cash flow reached $2.4 billion, up 30%, with over 130% conversion from earnings [15][19] Business Line Data and Key Metrics Changes - In Commercial Engines and Services (CES), orders were up 5%, with services orders increasing by 32% and equipment orders down 42% due to timing [17][19] - CES revenue grew 27%, with services revenue up 28% and internal shop visit revenue up 33% [17][19] - In Defense and Propulsion Technologies (DPT), revenue grew 26%, with engine volume up 83% year-over-year [19][19] Market Data and Key Metrics Changes - Year-to-date, orders increased by 13%, with services orders up 31% [4] - The total DPT backlog is at $19 billion, up $1.5 billion year-over-year [19] - The company expects to grow LEAP deliveries more than 20% for the full year, up from a prior outlook of 15% to 20% [7][19] Company Strategy and Development Direction - The company is focused on enhancing its FlightDeck operating model to improve delivery and meet customer demand [3][5] - Investments in LEAP durability and next-generation technologies are prioritized to deliver value to customers [10][12] - The company is committed to expanding its supply chain capacity, investing nearly $1 billion to support growth [9][19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand for services and products, raising full-year guidance across the board [5][19] - The company anticipates continued growth in commercial services and engine deliveries, with a positive outlook for 2026 [20][56] - Management highlighted the importance of addressing supply chain challenges and improving material availability [78] Other Important Information - The company has secured significant commitments from major airlines, including Korean Air and Cathay Pacific, for its engines [12][13] - The company is actively working on next-generation engine technologies, including the GE9X and RISE program [11][12] Q&A Session Summary Question: Can you elaborate on the services performance and factors driving it? - Management noted that improved material availability and increased work scopes contributed to strong services growth, with expectations for continued demand [28][30] Question: What gives confidence in the LEAP services margin outlook? - Management highlighted ongoing improvements in supply chain performance and operational efficiencies as key factors supporting the margin outlook [34][36] Question: How does the company balance capital deployment and share repurchase? - Management stated that the capital allocation approach remains balanced, focusing on reinvestment in the business while returning capital to shareholders [41][42] Question: What is the outlook for 2026, particularly regarding CES revenue growth? - Management indicated a positive outlook for 2026, expecting solid revenue growth driven by an increasing installed base and higher shop visit demand [55][56]

Financial Performance Highlights - GE Aerospace's adjusted revenue increased by 26% year-over-year in Q3 2025, driven by strong services and engine output[9] - Adjusted EPS grew by 44% year-over-year in Q3 2025[9] - Free cash flow increased by 30% year-over-year in Q3 2025[9] - Commercial Engines & Services (CES) saw a 28% increase in revenue and a 35% increase in total profit year-over-year[9] - Defense & Propulsion Technologies (DPT) experienced a 26% increase in revenue and a 75% increase in profit[9] Operational Performance - Commercial services revenue increased by 28% year-over-year[13] - Engine deliveries increased by 41% year-over-year[13] - Defense engine deliveries increased significantly by 83% year-over-year[14] Guidance and Outlook - The company is raising its full-year 2025 guidance across the board[9] - Adjusted revenue growth is now expected to be in the high-teens percentage range[31] - Adjusted EPS is projected to be between $600 and $620[31] - Free cash flow is expected to be between $71 billion and $73 billion[31]

Core Viewpoint - The airline industry is experiencing a supply-demand imbalance, benefiting FTAI Aviation, a company specializing in aircraft maintenance, repair, and leasing [1][4]. Company Overview - FTAI Aviation is based in New York City and operates in two main divisions: asset ownership and leasing, and manufacturing, refurbishing, and repairing aircraft engines and components [1]. - The company focuses on two key engines: the CFM56 and the V2500, which are widely used in commercial aviation [3]. Industry Challenges - The airline industry faces significant equipment supply issues, including a shortage of aircraft and components due to pandemic-related production halts, a lack of skilled labor, and an aging fleet requiring repairs or replacements [4]. - Aircraft engine maintenance and repair has become a critical bottleneck, with turnaround times increasing by 35% for legacy engines and 150% for new engines, with peak issues expected by mid-2026 [5]. Financial Performance - FTAI's second-quarter results showed a 53% year-over-year revenue increase to $676 million, with earnings per share (EPS) of $1.57, a significant recovery from a loss of $2.26 the previous year [9]. - The company's stock price has risen 47% since the July 29 results announcement, with a 19% increase this year and over 1,100% growth in the past five years [9]. Future Outlook - Wall Street forecasts a 47% revenue increase for FTAI this year to $2.55 billion, with further growth expected to $3.03 billion in 2026. EPS is projected to rise 160% this year to $4.75 and another 41% next year to $6.70 [10]. - The market cap of FTAI is approximately $17.2 billion, with a forward price-to-earnings (P/E) ratio of about 22, indicating it is relatively inexpensive compared to peers [11]. Demand Dynamics - Demand for air travel has returned to pre-pandemic levels and is expected to continue growing rapidly through 2040, further supporting FTAI's business model [11]. - FTAI is well-positioned to capitalize on ongoing supply chain issues in the aviation industry, as it provides essential engines and parts that are currently in high demand [12].