Al Root

When GE Aerospace reports earnings on Thursday morning, the fourth-quarter numbers will matter, but the company's outlook should matter more.

This year, ideally, will be pivotal for commercial aerospace, with the industry set to dig out from years of underproduction.

For the fourth quarter, Wall Street is looking for sales of $9.5 billion, operating profit of $1.7 billion, and earnings per share of $1.04, according to FactSet.

It's difficult to compare results to previous quarters. GE spun off GE Vernova, GE's power-generation technology business, on Apr. 2. In the third quarter of 2024, GE Aerospace reported sales of $8.9 billion, an operating profit of $1.8 billion, and earnings of $1.15 a share.

As for 2025 overall, Wall Street is looking for sales of about $39 billion, up about 12% compared with 2024; operating profit of about $8 billion, up 15%; and EPS of about $5.23, up 21%.

How GE Aerospace's outlook compares with that will help investors understand the stock price reaction. The numbers will need to be good. That's because, coming into Thursday trading, GE Aerospace stock, adjusted for any spins, is up roughly 80% over the past 12 months, beating the S&P 500 by more than 50 percentage points. Investors have been excited about accelerating demand for air travel.

Beyond the numbers, production at Boeing and Airbus, and along the overall aerospace supply chain, will be big topics of conversation on the company's earnings conference call, which starts at 7:30 a.m. Eastern time.

One of GE's jobs on Thursday will be to demonstrate to investors that it -- and its supply chain -- can produce all the engines and parts required to meet rising production, while keeping the existing fleet of commercial airliners healthy.

Combined, Boeing and Airbus made about 1,100 planes in 2024 -- many with GE engines under the wing -- which isn't enough to meet demand. In 2018, the last year before Boeing's 737 MAX issues and the pandemic, the pair produced about 1,600.

Between 2019 and 2024, the total number of planes made by both Boeing and Airbus amounts to about 6,500 jets, for an annual run rate of roughly 1,100. Over six years, that's almost 3,000 planes less than 2018 production rate would reach. Low production has roiled airlines, travelers, suppliers, Boeing and Airbus, and of course, aerospace investors.

Getting back to, or besting, 2018's production levels isn't a certainty.

"As we move into 2025, investors continue to grapple with original equipment (OE) versus aftermarket $(AM)$," wrote BofA Securities analyst Ron Epstein in a recent report.

He is skeptical, but things don't have to get back to 2018 levels all at once. Investors will welcome any improvement. Wall Street sees Boeing and Airbus production coming in at about 1,400 jets in 2025 and about 1,600 in 2026.

Write to Al Root at allen.root@dowjones.com

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January 22, 2025 17:31 ET (22:31 GMT)

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