Jan 22 (Reuters) - GE Aerospace forecast annual profit above estimates on Thursday, driven by strong demand for high-margin aftermarket parts and services as airlines are expected to prioritize maintenance spending due to aircraft supply constraints.
Despite jetmakers ramping up deliveries over the past year, demand for new aircraft continues to outstrip supply as airlines seek to capitalize on robust travel demand across multiple regions.
The shortage has proved a boon for engine makers, who earn most of their profits from long-term parts and maintenance contracts that typically carry hefty costs for airlines.
The jet-engine maker expects 2026 adjusted profit per share in the range of $7.10 to $7.40, compared with analysts' expectation of $7.11 per share, according to data compiled by LSEG.
It also expects 2026 adjusted revenue to increase in the low-double-digit percentage range.
"We enter 2026 with solid momentum to build upon these results and are well positioned to create greater value for our customers," CEO Larry Culp said on Thursday.
The Ohio-based company dominates the engine market for narrowbody jets and has a strong position in widebodies. More than 70% of its commercial engine revenue comes from parts and services.
It expects revenue to rise by a mid-teens percentage in its commercial engines and services unit.
The company is also benefiting from stabilizing air traffic, which is putting more jets back in the air and boosting maintenance demand.
Engine shortages and reliability issues, however, have driven up airline costs and fueled a growing discord between suppliers and carriers across the industry, with many airlines pushing back against higher prices.
CFM International, which is jointly owned by GE Aerospace and France's Safran SAF.PA, renewed an agreement with global airlines to guarantee competition in the market for engine maintenance and repairs.
GE Aerospace reported fourth-quarter adjusted profit of $1.57 per share, compared with $1.32 per share a year earlier.
For the quarter ended December 31, its adjusted revenue rose 20% to $11.87 billion.