GE Aerospace Falls 4% Despite Earnings Beat and Raised Outlook as Costs Climb; RTX Edges Higher, Boeing Barely Moves

A beat-and-raise quarter from GE Aerospace (NYSE:GE | GE Price Prediction) is running into a jump in engine-related costs. GE Aerospace stock fell 4%, landing at $299.59 during the morning session, even after the jet engine maker topped estimates and raised its full-year outlook.

Meanwhile, RTX (NYSE:RTX) stock is up 0.52% to $193.15. The gap stands out because both companies sell engines into the same commercial aviation market, pointing to a selloff rooted in GE Aerospace’s own quarter.

Allowances and Reserves Climb Behind the Beat

On the surface, GE Aerospace delivered a clean quarter. Its Q3 2026 adjusted earnings per share (EPS) of $2.25 beat the $1.99 consensus estimate, and revenue of $14.12 billion topped the $12.84 billion analysts expected.

Management raised GE Aerospace’s full-year 2026 guidance across the board. That outlook now calls for adjusted EPS of $8 to $8.10, up from a prior range of $7.65 to $7.85. Targets for operating profit and free cash flow moved higher as well.

Beneath those headline figures, GE Aerospace’s costs are climbing fast. GE Aerospace’s sales discounts and allowances rose sharply on new engine installations, spare parts and durability reserves. The company’s cash generation slid too, with free cash flow falling 9.2% year over year to $2.04 billion while operating income barely moved at $2.81 billion.

Mix and inflation also weighed on GE Aerospace margins, partially offsetting gains from higher volume and pricing. Separately, the company deferred revenue recognition on its GE9X engine pending midseal certification, which adds one more open question to an already complex cost story.

Culp Points to Momentum and a Deep Backlog

Chief executive H. Lawrence Culp Jr. struck an upbeat tone as GE Aerospace posted its results. “Thanks to the collaboration of the GE Aerospace team with our supplier partners we continue to build momentum,” Culp stated. He also pointed to record internal shop visit output and an agreement to acquire Consolidated Precision Products, a castings supplier, to expand capacity.

GE Aerospace now expects commercial services revenue to grow at a low-double-digit rate in 2027. That forecast rests on what Culp called the company’s “over $170 billion commercial services backlog,” which gives the services business deep visibility into future work.

Demand is holding firm at GE Aerospace, with total orders up 49% to $19 billion in the quarter. Its commercial services orders climbed 23%, and the company keeps spending over $3 billion a year on research and development.

Selloff Stays Contained to GE Aerospace

GE Aerospace makes most of its profit servicing commercial jet engines over their working lives, while RTX pairs its engines with defense systems. Boeing (NYSE:BA) builds the aircraft those engines power. A service-heavy model like GE Aerospace’s puts parts allowances and durability reserves close to the center of its earnings, which helps explain why the cost jump hurts. Boeing shares are down 0.49% to $190.57.

Across the sector, the iShares U.S. Aerospace & Defense ETF (CBOE:ITA) is down 0.4% to $206.90. That far smaller decline marks the GE Aerospace stock selloff as company-specific.

Furthermore, the SPDR S&P 500 ETF Trust (NYSEARCA:SPY) is down by only 0.1% to $765.92. With the broad market nearly flat, macro weakness explains little of the slide in GE Aerospace shares.

GE Aerospace’s Cost Picture Sets the Next Test

GE Aerospace still faces the question of whether allowances and durability reserves ease next quarter. Midseal certification for the GE9X is the other open variable, since GE Aerospace can’t recognize that engine’s deferred revenue until it comes.

As long as those costs keep climbing, GE Aerospace stock could stay volatile around each quarterly report. Position sizes should stay small until GE Aerospace’s cost picture resolves.

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