The Airframer Chooses, the Airline PaysWide moat

GE Aerospace (GE) — moat facet

The party that selects the engine and the party that pays for it are different people, twenty-five years apart.

The commercial engine business has a structure that almost no other industry shares: the party that selects the product and the party that pays for it over its life are different people, separated by twenty-five years.

Two customers, twenty-five years apartAirframer selectsLEAP exclusive on 737MAX; 55%+ of A320neoEngine soldat a gross loss,about -1.8% in 2025Airline operatesservice agreementsof 10-25 yearsGE earns45 cents on theservices dollarCES orders grew 52% in the first half of 2026 to $30,263m — the repeat-selection proxy.
The party that selects the product and the party that pays for it are different people.

An airframer launches an aircraft and selects the engine or engines it will offer. That decision determines which manufacturer can compete for every unit of that aircraft ever built. On the Boeing 737 MAX the LEAP is exclusive1; on the Airbus A320neo family, CFM and Pratt & Whitney both compete, and CFM holds more than fifty-five per cent2.

The airline then buys the aircraft, with an engine whose supplier may already be fixed, and inherits a maintenance obligation lasting the airframe's life. Long-term service agreements generally run ten to twenty-five years3. Over that period the airline will spend several times the engine's purchase price on keeping it airworthy, and its choice of supplier for that spending was largely made by somebody else.

GE Aerospace's commercial behaviour follows from this asymmetry. It discounts the engine to the airframer and the launch customers, accepting a negative gross margin on equipment4, because the position is what is being bought. It then earns forty-five cents on the services dollar5 from a customer with no practical alternative.

What keeps the arrangement from being simply extractive is that airlines are repeat buyers and reputations are long. An operator badly treated on the aftermarket of one fleet influences the selection of the next. The 2025 order wins from Qatar Airways, Emirates, International Airlines Group, ANA Holdings, Malaysia Aviation Group, Korean Air, Cathay Pacific and Pegasus6 are, in that sense, aftermarket verdicts as much as engine ones.

Repeat selection is the only real verdict. There is no disclosed metric for it; the visible proxy is the order book, and Commercial Engines & Services orders grew fifty-two per cent in the first half of 2026 to $30,263 million7.

Moat trajectory: Holding steady

The asymmetry between the airframer who chooses and the airline who pays is a permanent feature of this industry. GE Aerospace's 2025 order wins across the GE9X, GEnx and LEAP programmes suggest the aftermarket relationships are not being damaged by it.

The number that tests this moat
Reported
Commercial Engines & Services orders
+52% in the first half of 2026, to $30,263M

The airframer selects and the airline pays, twenty-five years apart, under service agreements running ten to twenty-five years. Repeat selection is the only verdict on whether the aftermarket pricing has been fair, and the order book is the visible proxy.

Source: GE Aerospace second-quarter 2026 earnings release, July 16, 2026 ↗
References
  1. Third-party estimateOn the Boeing 737 MAX the LEAP is exclusive; on the Airbus A320neo family, CFM and Pratt & Whitney both compete, and CFM holds more than fifty-five per cent.
    Aviation and market coverage of GE Aerospace's narrowbody position and delivery ramp - the LEAP as the exclusive powerplant on the Boeing 737 MAX and holding more than 55% of the Airbus A320neo family through the CFM joint venture, the target of about 2,000 LEAP deliveries in 2026, first-half deliveries up 41%, and CFM RISE described as a technology demonstrator rather than a product for sale. — 2026 · publ. August 2026 · source ↗
  2. Third-party estimateOn the Boeing 737 MAX the LEAP is exclusive; on the Airbus A320neo family, CFM and Pratt & Whitney both compete, and CFM holds more than fifty-five per cent.
    Aviation and market coverage of GE Aerospace's narrowbody position and delivery ramp - the LEAP as the exclusive powerplant on the Boeing 737 MAX and holding more than 55% of the Airbus A320neo family through the CFM joint venture, the target of about 2,000 LEAP deliveries in 2026, first-half deliveries up 41%, and CFM RISE described as a technology demonstrator rather than a product for sale. — 2026 · publ. August 2026 · source ↗
  3. ReportedLong-term service agreements generally run ten to twenty-five years.
    GE Aerospace Form 10-K, FY2025 - Report of Independent Registered Public Accounting Firm — the critical audit matter on revenue recognition for certain Aerospace long-term service agreements, which notes that the agreements generally range from 10 to 25 years, that revenue is recognised on the percentage-of-completion method, and that the key assumptions requiring significant management judgement are customer utilisation, the expected timing and extent of future overhaul services, future costs of materials and labour, and forward-looking information. — FY2025 · publ. January 2026 · source ↗
  4. ReportedIt discounts the engine to the airframer and the launch customers, accepting a negative gross margin on equipment, because the position is what is being bought.
    GE Aerospace Form 10-K, FY2025 - consolidated financial statements — statement of operations including sales of equipment, sales of services, insurance revenue and their respective costs; statement of financial position including insurance liabilities and annuity benefits, shareholders' equity, property plant and equipment and shares outstanding; and the statement of cash flows. — FY2025 · publ. January 2026 · source ↗
  5. Moat Explorer calcIt then earns forty-five cents on the services dollar from a customer with no practical alternative.
    Moat Explorer calculation from GE Aerospace's reported figures. Equipment gross margin: sales of equipment less cost of equipment sold was $(314)M in 2022, $(582)M in 2023, $(67)M in 2024 and $(223)M in 2025, about $1.2 billion cumulatively, and about -1.8% of equipment sales in 2025 against -0.7% in 2024. Services gross margin: (18,345-10,836)/18,345 = 40.9% in 2022, 42.4% in 2023, 43.8% in 2024 and (30,163-16,586)/30,163 = 45.0% in 2025. Services RPO of $163,029M against services revenue of $30,163M is 5.4 years, and $163,029M of $190,564M is 86%. LEAP deliveries of 1,570 + 1,407 + 1,802 + 1,030 in the first half of 2026 total 5,809 since the start of 2023. LEAP was 1,802 of 2,386 commercial engines in 2025, 75.5%. — FY2022-FY2026 · publ. September 2026 · source ↗
  6. ReportedThe 2025 order wins from Qatar Airways, Emirates, International Airlines Group, ANA Holdings, Malaysia Aviation Group, Korean Air, Cathay Pacific and Pegasus are, in that sense, aftermarket verdicts as much as engine ones.
    GE Aerospace Form 10-K, FY2025 - Segment Operations — Commercial Engines & Services: segment revenue, profit and margin, commercial engine and LEAP unit deliveries, internal shop visit revenue growth, the CES remaining performance obligation, the 2025 engine commitments from Qatar Airways, Emirates, International Airlines Group, ANA Holdings, Malaysia Aviation Group, Korean Air, Cathay Pacific and Pegasus, and commercial departures growth. — FY2025 · publ. January 2026 · source ↗
  7. ReportedThere is no disclosed metric for it; the visible proxy is the order book, and Commercial Engines & Services orders grew fifty-two per cent in the first half of 2026 to $30,263 million.
    GE Aerospace second-quarter 2026 earnings release (Exhibit 99.1 to Form 8-K of July 16, 2026) — total company GAAP and non-GAAP results, segment revenue, orders and operating profit, free cash flow, the raised full-year 2026 guidance for adjusted revenue growth, operating profit, adjusted earnings per share and free cash flow, the LEAP-1B durability kit certification, the XA102 and GE426 defence programmes, the NASA hybrid-electric ground tests, and the chief executive's commentary. — Q2 2026 · publ. 16 July 2026 · source ↗
Sources
Generated September 23, 2026