The MoatWide moat

GE Aerospace (GE) — moat facet

The barrier is not capital or engineering but certification and time: a competitor with unlimited money would need roughly three decades to take a dollar of this profit.

The clean way to test a moat is to ask what a competitor would have to do to take a dollar of the profit, and how long it would take. For GE Aerospace the answer is roughly thirty years, and it is not a figure of speech.

What the moat actually consists of80,000engines installedover sixty years~70%of revenue fromthe aftermarket$163bnof servicesalready contracted14%of that servicesbacklog dueafter 15 yearsGE Aerospace Form 10-K FY2025: 86% of the $163bn services obligation is due within 15 years.
The barrier is not capital or engineering. It is approval, and the contracts it wins run for decades.

Suppose a rival engine were better and cheaper tomorrow. It would first need certification, which takes the best part of a decade. It would then need an airframer to design it onto an aircraft, which happens when a new aircraft is launched and essentially never in between. The aircraft would then have to be built, sold and flown. Only after the first shop visit — typically several years into service — would a single dollar of aftermarket revenue move. In the meantime GE Aerospace's 50,000 commercial and 30,000 military engines1 continue to consume parts that only it is approved to supply.

That structure shows up in the accounts in a way almost no other company's does. Equipment has been sold at a gross loss in each of the last four years2. Services carried a forty-five per cent gross margin in 2025, up from 40.9% in 20223. The profit does not arrive with the sale; it arrives for decades afterwards, which is why the company's remaining performance obligation for services is $163,029 million against annual services revenue of $30,163 million4 — more than five years of the services business already under contract, with eighty-six per cent of it scheduled inside fifteen years5.

Four things hold it up, and they are not equally strong. The razor-and-blade structure is the strongest and the most unusual. The installed base is the second: 80,000 engines is an asset assembled over sixty years that cannot be bought. Third is the certification and approval regime, which converts a technical advantage into a legal one. Fourth, and weakest, is the defence business, which has genuinely durable platform positions and earns 12.3% on them against the commercial segment's 26.6%6.

The honest limits are three, and each has its own page. Half of the narrowbody franchise belongs to Safran, because CFM International is a fifty-fifty non-consolidated joint venture7. The services profit is an estimate: long-term service agreements run ten to twenty-five years and revenue is recognised on percentage of completion against forecasts of how a customer will use the aircraft and what an overhaul will cost two decades out8. And the balance sheet carries $36,894 million of run-off insurance liabilities against $18,677 million of equity9.

This is still a wide moat, and the rating is not a close call. It is one of the few businesses in this collection where a competitor with unlimited money could not take the profit inside a decade, because the barrier is not capital or talent but time and certification.

The number that tests it is return on capital. On the capital actually employed in the aerospace business — netting the run-off insurance assets against its liabilities — GE Aerospace earned roughly a third on its money in 202510, against a cost of capital nearer nine per cent. It should. A company with $45,855 million of revenue and only $7,987 million of net property, plant and equipment11 is renting out sixty years of certification, not a factory.

Moat trajectory: Widening

The installed base is growing faster than it retires — 2,386 commercial engines delivered in 2025 against 1,911 — and the services backlog rose eleven per cent in 2025 and another eleven per cent in the first half of 2026 to $210,790 million. Services gross margin has improved in each of the last four years to 45.0%. What is not widening is the ownership: the narrowbody franchise remains half Safran's, and the run-off insurance book remains on the balance sheet.

The number that tests this moat
Moat Explorer calc
ROIC vs a 9% cost of capital
about 33% against 9%

Segment profit of $10,157M taxed at the 14.1% effective rate over capital employed of $26,779M on a sources-of-capital view, netting the run-off insurance book out. The figure is a range rather than a point: $87,801M of treasury stock depresses book equity and flatters it. The unflattered cross-check is $10,157M of segment profit on $7,987M of net property, plant and equipment.

How it's calculated: NOPAT = total segment profit x (1 - effective tax rate). Capital employed = shareholders equity $18,677M + total borrowings $20,494M - cash $12,392M. Insurance investment securities of $38,788M and insurance liabilities of $36,894M are roughly matched and excluded. A conventional assets-less-current-liabilities basis gives about 22%. The 9% hurdle is an assumed WACC.
Source: Moat Explorer calculation from GE Aerospace's filings ↗
Aspects of the moat
DIG DEEPER 01
The Engine Is Sold at a Loss
Four consecutive years of negative equipment gross margin, against a services margin that has risen every year to forty-five per cent.
DIG DEEPER 02
Eighty Thousand Engines
Eighty thousand engines is an asset assembled over sixty years that cannot be bought, only outlived.
DIG DEEPER 03
Half the Best Franchise Belongs to Safran
The engine that dominates the world's narrowbody fleet is sold by a joint venture GE Aerospace half owns and does not consolidate.
DIG DEEPER 04
The Defence Half, and What It Does Not Earn
Platforms that fly for forty years, at twelve per cent, because the customer can see the costs.
References
  1. ReportedIn the meantime GE Aerospace's 50,000 commercial and 30,000 military engines continue to consume parts that only it is approved to supply.
    GE Aerospace Form 10-K, FY2025 - Item 1 general and Item 2 Properties — the installed base of approximately 50,000 commercial and 30,000 military engines and the statement that it supports an aftermarket representing approximately 70% of revenue, the FLIGHT DECK operating model, customers in approximately 120 countries, the facility count, human capital and employee numbers, the intellectual property discussion, the research and development table splitting company-funded from customer- and partner-funded spending, and the engine testing milestones. — FY2025 · publ. January 2026 · source ↗
  2. Moat Explorer calcEquipment has been sold at a gross loss in each of the last four years.
    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 ↗
  3. Moat Explorer calcServices carried a forty-five per cent gross margin in 2025, up from 40.9% in 2022.
    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 ↗
  4. ReportedThe profit does not arrive with the sale; it arrives for decades afterwards, which is why the company's remaining performance obligation for services is $163,029 million against annual services revenue of $30,163 million — more than five years of the services business already under contract, with eighty-six per cent of it scheduled inside fifteen years.
    GE Aerospace Form 10-K, FY2025 - Management's Discussion and Analysis — consolidated results, profit and operating profit margins, adjusted earnings per share, total remaining performance obligation and its year-on-year movement, cash flow from operations and free cash flow, the share repurchase programme, borrowings and the financing-arrangement discussion. — FY2025 · publ. January 2026 · source ↗
  5. ReportedThe profit does not arrive with the sale; it arrives for decades afterwards, which is why the company's remaining performance obligation for services is $163,029 million against annual services revenue of $30,163 million — more than five years of the services business already under contract, with eighty-six per cent of it scheduled inside fifteen years.
    GE Aerospace Form 10-K, FY2025 - notes to the consolidated financial statements — the segment note including segment expenses, segment profit and other segment income; contract assets, contract liabilities and long-term service agreement balances; the remaining performance obligation note with its expected recognition schedule; goodwill and intangible assets; and the geographic revenue table. — FY2025 · publ. January 2026 · source ↗
  6. ReportedFourth, and weakest, is the defence business, which has genuinely durable platform positions and earns 12.3% on them against the commercial segment's 26.6%.
    GE Aerospace Form 10-K, FY2025 - Segment Operations — Defense & Propulsion Technologies: segment revenue split between Defense & Systems and Propulsion & Additive Technologies, equipment and services revenue, segment profit and margin, defence engine unit deliveries, the DPT remaining performance obligation, the US Air Force F110-GE-129 Indefinite Delivery/Indefinite Quantity contract valued up to $5 billion, the Hindustan Aeronautics F404-GE-IN20 order valued at $1.6 billion, and the government-funding discussion. — FY2025 · publ. January 2026 · source ↗
  7. ReportedHalf of the narrowbody franchise belongs to Safran, because CFM International is a fifty-fifty non-consolidated joint venture.
    GE Aerospace Form 10-K, FY2025 - Item 1 Business — segment descriptions for Commercial Engines & Services and Defense & Propulsion Technologies, the CFM International 50-50 non-consolidated joint venture with Safran Aircraft Engines, the commercial engine platforms (LEAP, CFM56, GEnx, GE9X, CF6, GE90), the defence platforms (F110, F404, F414, T408, T700, T901, LM2500), the Propulsion & Additive Technologies brands, the CFM RISE programme, the customer description including airframers and sole-source positions, and the segment revenue and services shares. — FY2025 · publ. January 2026 · source ↗
  8. ReportedThe services profit is an estimate: long-term service agreements run ten to twenty-five years and revenue is recognised on percentage of completion against forecasts of how a customer will use the aircraft and what an overhaul will cost two decades out.
    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 ↗
  9. ReportedAnd the balance sheet carries $36,894 million of run-off insurance liabilities against $18,677 million of equity.
    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 ↗
  10. Moat Explorer calcOn the capital actually employed in the aerospace business — netting the run-off insurance assets against its liabilities — GE Aerospace earned roughly a third on its money in 2025, against a cost of capital nearer nine per cent.
    Moat Explorer calculation from GE Aerospace's FY2025 financial statements. NOPAT = total segment profit of $10,157M times one minus the effective tax rate of 14.1% ($1,405M on $10,000M) = $8,730M. Capital employed, sources-of-capital view netting the run-off insurance book out: shareholders' equity of $18,677M plus total borrowings of $20,494M less cash of $12,392M = $26,779M, giving about 33%. The insurance investment securities of $38,788M and insurance liabilities of $36,894M are roughly matched and are excluded; treasury stock of $87,801M depresses book equity and therefore flatters the ratio, so the figure is a range rather than a point. The unflattered cross-check is $10,157M of segment profit on $7,987M of net property, plant and equipment. The 9% hurdle is an assumed WACC. — FY2025 · publ. September 2026 · source ↗
  11. ReportedA company with $45,855 million of revenue and only $7,987 million of net property, plant and equipment is renting out sixty years of certification, not a factory.
    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 ↗
Sources
Generated September 23, 2026