Episode summary

GE Aerospace: Full Throttle [Business Breakdowns Episode 235]

Business Breakdowns · Feb 1, 2026 · 59 min · Hosts: Matt Reustle · Guests: Ramesh Narayanaswamy

Summary

GE Aerospace is a pure-play jet engine business built around commercial engines, defense engines, and a large aftermarket services franchise. Ramesh Narayanaswamy argues that the core of the story is not just engine manufacturing, but the long-lived installed base: about 70,000 engines, roughly 45,000 commercial and 25,000 military, with commercial aircraft accounting for most revenue and even more of the profit. The company’s narrow-body exposure is anchored by CFM International with Safran, while widebody programs like the Genx and G90 also give GE significant share across Boeing, Airbus, and COMAC platforms.

The episode emphasizes how the business model works. GE typically sells original equipment at low or negative margins to win the program, then earns far higher margins on spare parts, overhauls, and long-term service agreements over 20- to 30-year engine lives. Ramesh says the aftermarket is the key economic engine, with around 70% of revenue tied to services and unusually high visibility from a $175 billion backlog. He also says the business has become more resilient, with regulatory maintenance requirements, pricing power, and disciplined capital allocation supporting durable cash generation.

A large part of the discussion focused on Larry Culp’s role in simplifying GE. Ramesh credits him with deconglomerating the old GE, spinning off healthcare and power, focusing on aerospace, and bringing lean operating discipline to the company. The broader lesson, in his view, is that scarcity, durability, and the split between the equipment buyer and the long-term user create a very hard-to-replicate franchise.

Key takeaways

Ramesh says GE Aerospace is overwhelmingly driven by commercial engines and services, with commercial revenue about 85% of the total and services about 70% of revenue.
He argues the aftermarket is the profit center: GE sells engines at deep discounts upfront, then monetizes parts and service over a 25-year-plus engine life.
The company’s backlog is about $175 billion, which Ramesh says gives GE roughly six years of commercial visibility and about seven years excluding services.
Ramesh says Larry Culp improved GE by simplifying the portfolio, reducing debt, and applying Danaher-style lean operating discipline.
He sees GE’s biggest long-term risk in technology and market-share shifts, especially as Pratt & Whitney and others compete on future engine architectures.

Notable quotes

“At its core, they sell jet engines for both commercial as well as defense and military applications”

— Ramesh Narayanaswamy at 3:02

“70% of G's revenues overall comes from services which is very predictable spare parts revenues and services revenues from the install base”

— Ramesh Narayanaswamy at 10:46

“This is an extraordinarily difficult industry with very significant technical barriers in addition to regulatory barriers”

— Ramesh Narayanaswamy at 25:23

“the aftermarket can be three to four to five times the OE sale. That really drives the value for the business”

— Ramesh Narayanaswamy at 35:33

“what you lose in ultra high returns on capital you make up for in durability and visibility”

— Ramesh Narayanaswamy at 51:21

How the episode opens

This is business breakdowns. Business breakdowns is a series of conversations with investors and operators diving deep into a single business. For each business, we explore its history, its business model, its competitive advantages, and what makes it tick.

We believe every business has lessons and secrets that investors and operators can learn from and we are here to bring them to you. To find more episodes of breakdowns, check out join colossus.com. All opinions expressed by hosts and podcast guests are solely their own opinions.

Hosts, podcast guests, their employers, or affiliates may maintain positions in the securities discussed in this podcast. This podcast is forformational purposes only and should not be relied upon as a basis for investment decisions. This is Matt Russell and today we are breaking down GE Aerospace.

Now if you go by tickers, we did break down GE several years ago, but that episode focused on how Larry Culp at the time was turning around that Titanic that was GE the conglomerate. Today, Romesh Narana Swami, co-founder and portfolio manager of Tubian Partners, join me to go deeper on what is now a pure play aerospace business. So, we get into some of the unique dynamics of the supply chain in aerospace, the long cycle nature that differentiates it from many other industries that you look at.

And I marvel a bit on the complexity that is aircraft engine manufacturing, but not for long because this is another beautiful example of selling services attached to equipment. And I first met Romesh back in the summer of 2024 at a business breakdowns event. It did not take long for me to appreciate his approach around finding these businesses with unique scarcity or scale benefits.

and I finally got him on business breakdowns. So, please enjoy our conversation on GE Aerospace.

From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →

Topics

jet engine supply chain
aftermarket services margins
equipment sales
ge aerospace transformation
pure-play aerospace strategy

Companies and tickers mentioned

GE
GE Aerospace
Tourbillon Partners

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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.

GE Aerospace: Full Throttle [Business Breakdowns Episode 235]

Summary

Key takeaways

Notable quotes

How the episode opens

Topics

Companies and tickers mentioned

Watch the episode

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