Twelve Point Three Per Cent Against Twenty-Six Point SixNarrow moat

GE Aerospace (GE) — moat facet

The same alloys, the same factories, the same engineers, and less than half the margin.

GE Aerospace runs two businesses that make jet engines out of the same alloys in the same country with the same people, and one earns more than twice what the other does.

Segment margins, per cent10.1%202311.2%202412.3%202512.8%H1 2026Defence margin. The commercial segment ran 23.7%, 26.2%, 26.6% and 26.9% over the same periods.
Two hundred and twenty basis points of improvement in three years, and still fourteen points behind.

Commercial Engines & Services: revenue $33,314 million, segment profit $8,861 million, margin 26.6%. Defense & Propulsion Technologies: revenue $10,554 million, segment profit $1,296 million, margin 12.3%1. The gap is fourteen percentage points and it has been roughly that wide for years — CES at 23.7% and DPT at 10.1% in 2023, CES at 26.2% and DPT at 11.2% in 20242.

The explanation is not efficiency. It is the counterparty. A commercial engine's aftermarket price is set by what the part is worth to an operator who has no alternative. A defence engine's price is set by a government procurement process with cost visibility, competition at the programme level, and a political interest in the answer.

The second difference is the aftermarket structure. Services were seventy-five per cent of Commercial Engines & Services revenue in 2025 and fifty-one per cent of Defense & Propulsion Technologies revenue3. Militaries do much of their own maintenance, hold their own spares, and negotiate support contracts as programmes rather than accepting a manufacturer's catalogue. The blade is still GE's; the overhaul frequently is not.

What defence gives instead is stability. Government budgets do not fall because air travel does, fleets are retained for decades, and development is often funded by the customer.

The margin gap itself is the test, and the direction is mildly encouraging: DPT improved from 10.1% to 12.3% across three years4 and reached 13.8% in the June 2026 quarter5. A defence margin in the high teens would change how the segment is valued. A return to the low tens would say the 2023-2025 improvement was volume, not pricing.

Moat trajectory: Widening

Two hundred and twenty basis points of margin improvement across three years, and another thirty in the June 2026 quarter. The gap to the commercial segment remains fourteen points and is structural, but the segment is converting volume into margin rather than only into revenue.

The number that tests this moat
Reported
Defence margin improvement
+220 basis points across three years

From 10.1% in 2023 to 12.3% in 2025 on revenue of $10,554M. A defence margin in the high teens would change how the segment is valued; a return to the low tens would say the improvement was volume rather than pricing.

Source: GE Aerospace Form 10-K, fiscal year 2025 ↗
⚠ Threats to the moat
⚠ THREAT 01
The Customer Sets the Price and Audits the Cost
A customer that is also the regulator, the auditor and the legislature sets a different price from an airline.
References
  1. ReportedDefense & Propulsion Technologies: revenue $10,554 million, segment profit $1,296 million, margin 12.3%.
    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 ↗
  2. ReportedThe gap is fourteen percentage points and it has been roughly that wide for years — CES at 23.7% and DPT at 10.1% in 2023, CES at 26.2% and DPT at 11.2% in 2024.
    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 ↗
  3. ReportedServices were seventy-five per cent of Commercial Engines & Services revenue in 2025 and fifty-one per cent of Defense & Propulsion Technologies revenue.
    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 ↗
  4. ReportedThe margin gap itself is the test, and the direction is mildly encouraging: DPT improved from 10.1% to 12.3% across three years and reached 13.8% in the June 2026 quarter.
    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 ↗
  5. ReportedThe margin gap itself is the test, and the direction is mildly encouraging: DPT improved from 10.1% to 12.3% across three years and reached 13.8% in the June 2026 quarter.
    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