GE Soars on Aviation Boom and Raises 2023 Profit Forecast

General Electric on Tuesday raised its full-year profit outlook after quarterly earnings topped Wall Street estimates on robust demand for jet engine spare parts and services from airlines looking to cash in on surging air travel.

The company said it now expects adjusted earnings in 2023 to be $2.10 to $2.30 a share, up from its previous range of no more than $2.00 and above the $2.05 average of analyst estimates compiled by Bloomberg. GE also increased its free cash flow guidance to as much as $4.6 billion, compared to no more than $4.2 billion under its prior outlook.

The improved outlook reflects GE’s strong performance in the second quarter, when it reported a 59% increase in total orders and an 18% increase in total revenues year-over-year. The company’s profit margin also expanded by 1,510 basis points to 8.3%, while its free cash flow improved by $0.2 billion to $0.4 billion.

The main driver of GE’s growth was its aviation unit, which delivered double-digit growth in orders, revenue, and operating profit year-over-year driven by commercial momentum and strength in services. The unit’s profit margin increased by 160 basis points organically to 8.8%, as the company ramped up production of its LEAP engines and benefited from the recovery of air travel demand amid the easing of pandemic restrictions.

GE CEO Larry Culp said the company’s second-quarter performance was “strong”, building on its first-quarter momentum and marking “a solid first half of the year”. He said the company raised its full-year guidance “as market strength and the lean transformation within our more focused businesses drive significant profit and cash improvement across GE”.

Sources: AirGuide Business airguide.info, msn.com, ge.com, bloomberg.com, investors.com