Four Years of Selling Engines Below CostWide moat

GE Aerospace (GE) — moat facet

A company that earned $10 billion before tax reports its flagship product at a gross loss, on purpose, in the audited accounts.

It is worth dwelling on how unusual this disclosure is. A company reports sales of equipment and the cost of that equipment on adjacent lines, and the second is larger than the first, every year, for four years.

Equipment gross profit (loss), in $m-3142022-5822023-672024-2232025Bars show magnitude; every label is negative. About $1.2bn of cumulative gross loss.
Four consecutive years in the audited accounts, from a company that earned $10bn before tax in 2025.

2022: $7,837 million of equipment sales against $8,151 million of cost, and 2023: $9,318 million against $9,900 million1. Then 2024: $10,274 million against $10,341 million, and 2025: $12,159 million against $12,382 million2. Cumulatively, about $1.2 billion of gross loss on the product the company is named for.

The usual explanations do not apply. This is not a start-up buying share, not a loss-leader on a promotional line, and not an accident of accounting: these are the audited statements of a company that earned $10,000 million before tax in 20253. It is a deliberate transfer of profit from the moment of sale to the following three decades.

What an airline actually buys is not one price but two: the engine, and an implicit commitment to spend several times its value on keeping it flying. The manufacturer's problem is that the second payment is uncertain and far away, and the buyer's problem is that the first payment is certain and immediate. Discounting the engine solves both — and it solves them in the manufacturer's favour, because the customer's ability to walk away disappears the moment the engine is on the wing.

The risk in the arrangement is symmetrical to its reward. The loss is realised in cash and in earnings now; the compensation depends on the aircraft flying for its full life, the airline surviving, and the shop visit arriving on schedule. Where those assumptions failed — the aircraft retired early, the operator failed, the engine proved more durable than expected — the discount was simply a discount.

The equipment gross margin is given directly in the income statement: about minus 1.8% in 2025 against minus 0.7% in 20244. Deepening losses on a rising delivery count mean GE Aerospace is buying more future annuity. Losses that deepen while shop visit revenue stops growing would mean it is buying nothing.

Moat trajectory: Holding steady

Equipment gross margin was about minus 0.7% in 2024 and minus 1.8% in 2025 on a rising delivery count. Deeper losses on more engines is the model being exercised harder, not deteriorating — but it is also more capital committed to an annuity that has not yet arrived.

The number that tests this moat
Moat Explorer calc
Cumulative equipment gross loss
about $1.2 billion across 2022-2025

$(314)M in 2022, $(582)M in 2023, $(67)M in 2024 and $(223)M in 2025. This is a deliberate transfer of profit from the moment of sale to the following three decades, and the loss is realised in cash while the compensation is not.

Source: Moat Explorer calculation from GE Aerospace's filings ↗
⚠ Threats to the moat
⚠ THREAT 01
The Loss Is Cash Now and the Annuity Is a Promise
About $1.2 billion of realised loss, against revenue that arrives between 2030 and 2055 if the aircraft flies.
References
  1. Reported2022: $7,837 million of equipment sales against $8,151 million of cost, and 2023: $9,318 million against $9,900 million.
    General Electric Company Form 10-K, FY2024 - statement of earnings (loss) — sales of equipment, sales of services and insurance revenue with their respective costs for 2024, 2023 and 2022, on the continuing-operations basis that excludes GE HealthCare and GE Vernova. — FY2022-FY2024 · publ. February 2025 · source ↗
  2. ReportedThen 2024: $10,274 million against $10,341 million, and 2025: $12,159 million against $12,382 million.
    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 ↗
  3. ReportedThis is not a start-up buying share, not a loss-leader on a promotional line, and not an accident of accounting: these are the audited statements of a company that earned $10,000 million before tax in 2025.
    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 ↗
  4. Moat Explorer calcThe equipment gross margin is given directly in the income statement: about minus 1.8% in 2025 against minus 0.7% in 2024.
    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