Forty-Five Cents on the Services DollarWide moat

GE Aerospace (GE) — moat facet

The only half of the business nobody can bid for, and its margin has improved in every year on record.

The services line is where this company actually earns its living, and its margin has improved in every year on record: 40.9% in 2022, 42.4% in 2023, 43.8% in 2024 and 45.0% in 20251.

Services gross margin, per cent40.9%202242.4%202343.8%202445.0%2025On services revenue of $18,345m in 2022 rising to $30,163m in 2025.
Four consecutive years of improvement, in a service business whose customers cannot re-tender.

That is an unusual trajectory for a service business. Most of them face wage inflation against customers who re-tender annually. GE Aerospace's customers cannot re-tender, because the alternative to a GE overhaul with GE parts is a non-GE overhaul with non-GE parts, and on most engines that choice is either unavailable or carries a penalty in residual value and warranty.

The composition matters. Services here means maintenance, repair and overhaul of engines and the sale of spare parts, sold under long-term service agreements, spare parts agreements or time-and-material contracts2. The spare part is the highest-margin item in the chain: a single high-pressure turbine blade set is a large fraction of the cost of an overhaul, it is consumed rather than repaired, and it is approved for one engine type.

The pricing power is real and the company exercises it. Commercial services revenue grew twenty-six per cent in the June 2026 quarter, with internal shop visit revenue up twenty-five per cent and spare parts revenue up more than twenty-five per cent3 — and profit rose on higher services volume and price4. Volume and price, in the same sentence, in a business whose customers have no alternative.

The limit is that a large share of this revenue arrives under long-term service agreements whose profitability is an estimate rather than an observation, which is the subject of the threat on this page.

Watch the services gross margin itself. Four consecutive years of improvement, now at 45.0%5, is the clearest evidence that the blades are scarce. A year of decline that is not explained by mix would be the first sign that they are not.

Moat trajectory: Widening

Services gross margin has risen every year on record: 40.9%, 42.4%, 43.8%, 45.0%. In the June 2026 quarter services revenue grew twenty-six per cent with internal shop visit revenue up twenty-five per cent and spare parts up more than twenty-five per cent, and the company attributes the profit increase to volume and price. Volume and price together, from customers with no alternative.

The number that tests this moat
Reported
Services gross margin
45.0%, up from 40.9% in 2022

Improved in every year on record, on revenue of $30,163M. In the June 2026 quarter services revenue grew 26% with internal shop visit revenue up 25% and spare parts up more than 25%, and profit rose on volume and price together — from customers who cannot re-tender.

Source: GE Aerospace Form 10-K, fiscal year 2025 ↗
⚠ Threats to the moat
⚠ THREAT 01
The Services Profit Is an Estimate About 2045
A meaningful share of this quarter's profit depends on an estimate of what an overhaul will cost in 2045.
References
  1. Moat Explorer calcThe services line is where this company actually earns its living, and its margin has improved in every year on record: 40.9% in 2022, 42.4% in 2023, 43.8% in 2024 and 45.0% in 2025.
    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 ↗
  2. ReportedServices here means maintenance, repair and overhaul of engines and the sale of spare parts, sold under long-term service agreements, spare parts agreements or time-and-material contracts.
    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 ↗
  3. ReportedCommercial services revenue grew twenty-six per cent in the June 2026 quarter, with internal shop visit revenue up twenty-five per cent and spare parts revenue up more than twenty-five per cent — and profit rose on higher services volume and price.
    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 ↗
  4. ReportedCommercial services revenue grew twenty-six per cent in the June 2026 quarter, with internal shop visit revenue up twenty-five per cent and spare parts revenue up more than twenty-five per cent — and profit rose on higher services volume and price.
    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 ↗
  5. Moat Explorer calcFour consecutive years of improvement, now at 45.0%, is the clearest evidence that the blades are scarce.
    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 ↗
Sources
Generated September 23, 2026