General Electric Company (GE) Earnings Call Transcript & Summary

Good day, ladies and gentlemen, and welcome to the GE Aerospace Second Quarter 2026 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. I'd now like to turn the program over to your host for today's conference, Blair Shoor from the GE Aerospace Investor Relations team. Please proceed.

Thanks, Liz. Welcome to GE Aerospace Second Quarter 2026 Earnings Call. I'm joined by Chairman and CEO, Larry Culp; and CFO, Rahul Ghai. Many of the statements we're making are forward-looking and based on our best view of the world and our businesses as we see them today. As described in our SEC filings and website, those elements may change as the world changes. Additionally, Larry and Rahul will speak to total company and corporate financial results and guidance today on a non-GAAP basis. With that, over to Larry.

Blair, thank you, and good morning, everyone. The GE Aerospace team continues to execute with discipline and focus with our customers at the center of everything we do. Our 57,000 employees remain committed to our purpose, inventing the future of flight, lifting people up and bringing them home safely. I'd like to open by saying CFM International is supporting our customer, Ryanair, and assisting with the investigation into Flight 1879. Safety is our top priority at all times, and our thoughts are with the passengers, pilots and crew who were on board. The second quarter marked another quarter of significant growth, driven by robust commercial services. Overall, orders were up 17%, with both segments up at least low double digits. Revenue increased 24% with CES up 27% and DPT up 16%. The Operating profit grew 18%, with both segments up at least high teens. And EPS increased 22% and free cash flow grew 43% with conversion over 140%. These results closed out an exceptional first half with orders up 49% revenue up 27%, EPS growing 24% and free cash flow increasing 31% with 115% conversion. FLIGHT DECK is helping us drive the operational improvements, which undergird the significant output increases with the first half commercial services revenue up 32% and total engine deliveries up 31%. We remain focused on advancing what matters most to our customers, delivering on robust demand and our backlog of over $210 billion while investing in both current and next-gen technologies to improve time on wing and cost of ownership. Given the strength of our first half results and momentum for the remainder of the year, this morning, we're raising our 2026 guidance across the board. I'd like to thank the entire GE Aerospace team and our supplier partners for working so well together to deliver for our customers. Turning to Slide 4. FLIGHT DECK continues to strengthen our operational capabilities in safety, quality, delivery and cost, always in that order. With demand increasing for the F110 engine, at our site in Lynn, Massachusetts, we used flight deck to reduce overall production lead time for a critical component by roughly 60% through the consolidation of key process steps and reducing operator distance traveled. This supported F110 deliveries growing over 50% year-over-year in the second quarter. In May, I was in Brazil with the team at Selma, our largest MRO site, where I saw firsthand how we used flight deck to reduce 56 final assembly lead time by nearly 50%. Actions like this have improved total shop visit turnaround times by about a week since the end of 2025. And just last week, we held 3 Kaizens with GKN, a top supplier of fan cases and other key components to break constraints tied to rate performance. We worked collaboratively together to create detailed visual work instructions, increase capacity and implemented a 3D inspection technology, which led to a 90% improvement in inspection time. Work is now on our way to sustain these results and build further momentum. At the same time, AI is a force multiplier for FLIGHT DECK. Across our turbine air foils team, for example, we recently ran several Kaizens to improve the demand signal process. Standardizing and reducing demand signals strengthens supplier confidence deck to simplify and then using AI to automate the process, we cut the number of demand signals in half and reduced processing time by nearly 90% across 190 parts. Reducing the number of demand signals we sent our suppliers helps focus their efforts leading to priority supplier material input, increasing double digits sequentially and year-over-year again in the second quarter. This supported commercial services revenue up 32% in the first half including record internal shop visit output in the second quarter and first half total engine deliveries, up 31%, including LEAP engines up 41%. We're also expanding capacity to meet growing aftermarket demand for LEAP as the installed base is expected to more than double between now and 2030. Last week, we celebrated with MTU, the grand opening of their new maintenance facility in Fort Worth, which recently inducted their first LEAP-1B engine. All in, we're making meaningful progress with FLIGHT DECK. And while there's always more to do, we delivered substantial improvement in the first half, and our teams remain focused on meeting customer expectations. Shifting to Slide 5, while the environment remains dynamic, aftermarket demand has been resilient. First half departures were roughly flat, but we have not observed any changes in customer behavior. We expect a gradual return to modest departures growth in the second half. And combined with our commercial services backlog of roughly $170 million, we remain well positioned for services growth in 2026 and beyond. Demand continues to be robust for LEAP, our fastest-growing platform as demonstrated by Copa Airlines recently selecting up to 120 LEAP-1B engines to power their growing fleet of 737 MAX aircraft. In addition, maturing time on wing and lowering cost of ownership remain critical priorities for our customers. We recently achieved a major milestone completing the certification for the LEAP-1B durability kit including the upgraded HPT blade. This is expected to deliver approximately a twofold improvement in time on wing with full MRO and new make cutover expected early next year. At the same time, we're improving LEAP turnaround times, which are now around 100 days, down over 2 weeks year-over-year. Keeping customer fleets flying is critical, and we've reached nearly 0 grounded LEAP powered aircraft due to engines, supporting our customers' need for reliable lift. We're also continuing to advance the future of FLIGHT. Through the NASA electrified powertrain flight demonstration or EPFD project, we recently completed a ground test for the megawatt class hybrid electric demonstrator. This represents a major milestone in understanding hybrid electric flight by bringing together advanced engines, electrical power systems and controls. We've also expanded our relationship with Beta Technologies, who joined the EPFD project last year to advance the modification of the EPFD aircraft. We're looking forward to this plan being part of the flying display at the Farnborough Air Show next week. Within defense, we continue to support robust demand for our services and products both domestically and with Allied partners, while advancing next-gen technologies. We announced an agreement with Turkish Aerospace Industries to provide F404 engines for its HURJET Advanced Jet Trainer program and our CP7 engines were selected to power the U.K. Ministry of Defense new medium helicopter program. We completed an assembly readiness review for the XA-102 adaptive cycle engine, a critical milestone that moves the program from design into assembly and test. This builds on the progress of the XA100, and validates that the XA102 engine design, manufacturing process and supply chain are progressing and on schedule. And we continue to strengthen our position in the fast-growing collaborative combat aircraft or CCA market with our suite of products, both the GEK 1500 and the GE426 achieved significant milestones to move to preliminary design review, bringing them closer to eventual flight on small and medium thrust CCAs, respectively. We look forward to sharing more exciting wins and updates at the Farnborough Air Show next week. Stepping back, we're focused on translating our unmatched experience and investments into value for our customers while driving long-term growth. Rahul, over to you.

Thank you, and good morning, everyone. GE Aerospace delivered another strong quarter, marked by double-digit growth across all key metrics. Orders were up 17% and with CES up 18% and DPT up 12%. Revenue increased 24%, marking our fifth consecutive quarter of at least 20% growth. CES was up 27% and PPT grew 16%. Operating profit was $2.7 billion, up 18%, driven by services volume and price. As expected, margins decreased 130 basis points to 21.7% from installed engine growth, investments and inflation. EPS was $2.02, up 22%, and from increased operating profit, a lower tax rate and a reduced share count. Free cash flow was $3 billion, up 43% from higher earnings a nearly $200 million reduction in working capital and AD&A, including year-over-year favorability from tariffs. Net income conversion was over 140%. Our results built on the strong first quarter, with year-to-date revenue up 27%, operating profit up nearly $800 million, largely driven by strong growth in commercial services, and free cash flow up over $1 billion. Going deeper on our 22% EPS growth this quarter. Increase in operating profit drove $0.31 or over 85% of the improvement in EPS. Growth in segment profit was partially offset by corporate cost from lower interest income and an increase in intercompany eliminations. The remainder of the EPS growth was driven by a lower tax rate and reduction in share count. Tax rate decreased 2 points to 16.7% primarily from tax planning and benefit from recent tax legislation. Share count was down $24 million from 2% or 2% from our previously announced capital allocation actions. Turning to CES. In the second quarter, orders grew 18%. Services were up 22% and up 34% in the first half. Equipment was up 7% as some orders shifted to second half while nearly doubling year-to-date. Revenue increased 27%. Services grew 26%. Internal shop visit revenue grew 25% from higher volume, including LEAP internal shop visits up over 50% and widebody mix. Spare part sales increased over 25% and from improved material availability that helped us fulfill strong customer demand, growth in LEAP external channel and price. Even with strong revenue growth, given robust orders, spare parts delinquency, which represents shipments that have been delayed due to material availability constraints grew 20% sequentially in the second quarter. Work scopes continues to be favorable for LEAP and widebody programs and remained stable for CFM56. Equipment revenue grew 30% and with engine deliveries up 26%, including LEAP, up 24%. Wide-body deliveries were up 30% with the GE NX up significantly more. Profit was $2.7 billion, up 20% from higher services volume and price. As expected, margins were down 160 basis points to 27.3%. A from installed engine growth, including GE9X investments and inflation. Year-to-date, CES has delivered a very strong first half with orders growth of over 50%, revenue growth of 30%, including services up 32% and operating profit of $5 billion up approximately $900 million year-over-year. In DPT, orders increased 12%. Defense book-to-bill was one in the quarter and 1.7% in the first half. Total DPT backlog was over $30 billion, up roughly $5 billion since the start of the year. Revenue grew 16%. Defense & Systems revenue was up 12%, driven by growth in both services and equipment with engine deliveries up 7%. Propulsion and add technologies grew 23%, with growth led by Avio Aero. Profit grew 18%, and margins were up 30 basis points to 13.8% from increased volume and price, partially offset by mix, investments and inflation. In the first half, DPT delivered solid results with orders growth of 40%, revenue growth of 17% and operating profit of around $900 million, up 17%. Moving to guidance on Slide 10. Our first half exceeded expectations, and we expect strength to continue into the second half. As a result, we are raising our full year guidance across the board. We are expecting overall revenue to grow high teens, up from prior outlook of low double digits. We expect CES growth of around 20%, up from prior outlook of mid-teens. We now expect commercial services to grow low 20s, up from mid-teens. Commercial Services backlog stands at roughly $170 billion, up nearly $30 billion since the end of 2024. Given the sustained demand environment and existing delinquency, we are entering third quarter with more than 95% of spare parts revenue in backlog, similar to second quarter. Engines already off-wing and a pipeline of planned removals in the third quarter exceed our full year shop visit guide by over 40%. This provides us with ample visibility into demand to fulfill our outlook for 2026. We now expect commercial equipment to grow around 20%, up from mid- to high teens with LEAP deliveries up high teens from 15% previously. And we expect DPT growth of low double digits, up from mid- to high single digits. Operating profit is now projected to be in a range of $10.55 billion to $10.75 billion with improvement in both segments. CES operating profit is now expected to be in the range of $10.25 billion to $10.35 billion, up $400 million versus the high end of the prior guide. This reflects a drop-through of around $1 billion of improvement in commercial services revenue, partially offset by higher equipment growth. We expect DPT profit to be in the range of $1.6 billion to $1.7 billion, up $50 million at the midpoint versus the prior guide, reflecting drop-through from higher revenue. Expectations for corporate costs and eliminations remain unchanged at $1.2 billion to $1.3 billion. Taken together, we are raising our EPS guidance to a range of $7.65 to $7.85, up $0.35 at the midpoint from the high end of the prior guide. This reflects higher profit, combined with a lower tax rate, which we now expect to be below 16.5% for the year. We are also raising our free cash flow guidance to $8.9 billion to $9.2 billion, up $650 million from the high end of the prior guide reflecting higher earnings and better working capital performance. Overall, 2026 is shaping up to be another strong year with high teens revenue growth and around $1.5 billion of profit and free cash flow growth. Building on the momentum the business has had in the last few years. With that, Larry, back to you.

Rahul, thanks. We're proud of the progress we've made in the first half. It reflects the strength of our leadership positions across commercial and defense and the continued focus of the GE Aerospace team to deliver for our customers. Our performance is underpinned by our sustained competitive advantages. With the industry's largest fleet, 80,000 engines and growing, and more than 2.3 billion flight hours, we operate across decades long life cycles. That unmatched scale keeps us close to our customers, making us the partner of choice. Our field experience, which enables continuous improvement in time on weighing and cost of ownership, outcomes our customers value most. We offer the best performing products under wing across narrow-body, wide-body, regional and defense, supported by deep technology expertise and a growing services network with roughly $3 billion in annual R&D spend and CapEx investments of over $1 billion. Our world-class engineering and manufacturing teams are advancing next-gen technologies to improve durability and efficiency and turnaround times while building additional capabilities for our defense customers through developing innovative technologies and partnering with disruptors to move at pace. Through FLIGHT DECK, returning strategy into results with a focus on safety, quality, delivery and cost always in that order. Overall, we're confident in our path ahead as the GE Aerospace team is poised to deliver exceptional value to our customers and our shareholders. With that, Blair, let's go to questions.

Before we open the line, I'd ask everyone in the queue to consider your fellow analysts and ask one question so we can get to as many people as possible. Liz, can you please open the line?

[Operator Instructions] Our first question comes from Sheila Kahyaoglu with Jefferies.

Maybe if you could just update us on what you're assuming from a macro standpoint at this point? What degree of uncertainty you've maintained in the guidance? Because it seems like the service orders have been very good, up 22% in Q2, 34% for the first half, and that would support higher than the implied 12% services growth in the second half.

Sheila, good morning. There's no question that the environment remains dynamic. And as we look at where we are, as we said in our prepared remarks, I think we feel very good about our position here largely on the back of customer behavior, which hasn't changed. We've seen service orders continue to be robust. Parked aircraft, particularly the has actually declined since the beginning of March. I think Rahul highlighted the fact that we've got our MRO footprint really oversubscribed at this point in a significant way as much as we're pleased with the delivery increases. Our spare parts delinquencies are up, unfortunately. So I think -- on the back of that, and I don't suspect we'll hear much different in Farnborough, we do expect a return to more modest departure growth in the second half. We saw relatively flattish performance, a little bit of the uncertainty that kept us holding the guide 90 days ago. But we think that will begin to return to a more normal environment through the back half going into '27 clearly at a more robust level. So I think all in all, as we sit here midyear, demand could evolve from here, but it's been far more resilient than maybe many of us would have expected. I think the tone of IATA very much was -- let's all remember that as we saw in the pandemic, demand will return to more normal condition, probably sooner than we would have otherwise anticipated and potentially at a more pitch level. Therefore, let's continue to be prepared for that. And that's really, I think, what we're seeing in our conversations with our customers, that's what we're preparing for, not only with respect to the back half of 2026, but as we get ready for 2027.

Yes. And Sheila, to your second question on the first half to second half, as you said, that very strong first half for services, both on orders and revenue, and we raised our full year guide to the low 20 percentage growth. And now we're expecting services to be up $5 billion year-over-year. This is up about $1 billion from where we were just back in April which is what led to us improving the CES profit outlook by call it, say, $400 million from the high end of the prior guide. So we've been striving for linearity for the last several years, and we are making progress in that regard. But even with that, there is sequential growth from first half to second half of 2026. And on a year-over-year basis, the second half services revenue in our current guide up low double digit from a very strong second half last year. Keep in mind, second half last year was up $3 billion from first half. So the compares are getting much tougher. But as Larry said, we feel very comfortable with where we are, with the current guide. And as I said in my prepared remarks, 95% of our spare parts are in the backlog for third quarter. We have 40% over subscribed on shop visits and our CFM56 shop visits also as we think about the number of shops that we're expecting, we had at the higher end of the 2,300 to 2,400 shop visits. So all in all, we feel very good, and it's great that we're driving double-digit growth for services in the second half and that momentum should carry us into 2027, as Larry said a minute ago.

Our next question will come from Myles Walton with Wolfe.

One on cash flow, if I could. Obviously, you're outperforming that pretty handily this year, $9 billion on $10.5 billion of operating profit, which is obviously much higher than the free cash flow you have out there for on even higher operating profit number. So the question really is this free cash flow conversion performance, should we expect free cash flow to continue to grow as earnings grow from here? Or are we going to be confronted by cash conversion more normalizing and we should expect free cash flow to maybe stay at this level over the next couple of years?

Yes. Myles, thank you for the question. I mean, we're really pleased with how we performed in the second quarter. Cash flow of $3 billion, up 43% year-over-year. And the best part for all of us was that we were able to reduce our working capital in the quarter even with 24% earnings growth. That does not happen easily. So a lot of hard work by several people to make that happen. Great performance on receivables, really good performance on inventory as well. A little bit of help from tariffs, which we got $100 million of refund from tariff in the quarter, but in the grand scheme of things, that's not extremely material. So when we raised the guide for the year with over 100% conversion in the back half as well now. So -- and if you think about our guide, call it, $650 million from where we were at the high end of the prior guide, I would say about half and half from earnings growth and working capital performance. So we're carrying that working capital performance into our full year guide as well. So we are performing better. And as you said, the $9 billion plus for this year is more than what we expected for 2028 just a year ago, back in July 2025. So really good performance. I think we feel good about our working capital performance, but and there's nothing -- no huge onetime items in nature. So we do expect cash flow to grow here with earnings, but the conversion should normalize. I think we've been saying that as we over the last 12, 18 months, conversion should normalize, but even with that, we expect earning significant cash growth as our earnings growth.

Our next question comes from Seth Seifman with JPMorgan.

I wanted to ask, as we think about where things go from here, you talked about the visibility that you have into the remainder of '26. But maybe as we think about beyond sort of any indication that the strength this year is a pull forward of anything or any indication that the resilience that you're seeing in demand maybe gives you a little bit more confidence in the growth potential next year? And then lastly, on the supply side, talked about record shop visits this quarter being all booked up. To what degree is the supply side, a governor on services growth as we look forward?

Well, Seth if I take those in reverse order. I think we've made a tremendous amount of progress on the supply chain side, right? There's no way you have a print like this otherwise thrilled to see not only 9 consecutive quarters with double-digit increases from our critical suppliers, but maybe more importantly, the underlying work the deep technical collaboration and joint problem-solving that we'd see underway. I mentioned GKN. We could have mentioned a number of folks that are really working with us in ways that are materially better than a few years back. Hopefully, we're a better partner. We're a better customer, and that is just unlocking unleashing capacity. It's busting bottlenecks that otherwise would constrain us. I won't recite some of the demand numbers that we've shared. But as we think about the back half, as we think about '27 and frankly beyond, it's much more a supply side challenge than it is demand. Not that we would ever take the demand environment for granted, but we know despite this morning's news, we need to have a bigger, better second half, that's where our team is focused. There are no victory laps here and even [indiscernible] today.. And as we get ready for next year, that is very much the mindset. I think if we just focus on services for a moment, we know longer term, that in addition to that backlog that we've talked about, right, $170 billion commercially. The installed base should continue to grow gradually every year at a low to mid-single-digit rate. That's definitely the way we see things through the rest of this decade. We know we're going to have favorable effects from both work scope and price. I think Rahul mentioned that earlier. And to the extent that we can continue to make the progress with FLIGHT DECK, we think we're going to reduce that overdue, that delinquent backlog, which is a nice kicker over the next several years, not only from a revenue perspective, but to miles is an earlier question, it should help us from a working capital and cash flow perspective. So we know with LEAP becoming a larger part of the installed base eclipsing the CFM56, we know we'll get the GENX doubling between now or really between 24 and 30 that, that installed base with our growth platforms is definitely going to grow. Work scope, we believe, is a structural tailwind, largely as a function of the natural agent of the installed base. And we'll get a little bit of price here and there as we move forward. So I think we said earlier this spring, this summer, no reason should diverge from that double-digit commercial services growth, medium-term outlook, even as we go into next year will clearly be a higher trimming off point than we imagined. Again, the environment is dynamic. We're mindful of that. But with our backlog, with that framework and algorithm in place, and just the overall tone we're hearing from customers, I think we feel very good about where we are at this point.

Our next question comes from John Godyn with Citi.

Larry, last quarter, you held back raising guidance despite a strong 1Q because of the concerns in the environment. And I recall you mentioning a number of possible tail risks that were on your mind, completely understandable in the moment. But now with the benefit of hindsight, not only did GE serve a hype, but obviously thrived. And ultimately, we've got this large guidance revision today. I was hoping you could just spend a moment maybe reflecting on your own learnings from the experience elaborating a bit on what you're hearing from customers. Are we just structurally underappreciating the resilience of the business and its ability to compound value through complex macro backdrops?

Well, John, I would never suggest anyone underappreciates what we do in the value of the franchise. I'll leave that to others to make that assessment. There's no doubt, I think in our minds that we would play April all over again in the same way that we did. We did not know at that time when the conflict was still fresh what our customers would do. Perhaps we know more definitively that, that lesson from the pandemic that we've touched on a few times over the last several months, which was certainly [indiscernible] in IATA that we need to make sure we are prepared for the other side of the uncertainty has really played out, right? And again, lots of different data points here to speak to the resiliency of demand, particularly in the aftermarket. There is no way, I think, in the moment, given the uncertainty, just given the headlines that we would have been well served with investors to get out with an early bump in the guide. But here we sit mid-year. We know how the market has responded to the uncertainty to the dynamic conditions that are clearly out there. All the while, we continue to do what we do, right, from an execution perspective, not taking anything for granted, but also knowing that with the backlog with demand remaining robust that we needed to continue to invest. We need to continue to procure we need to continue with our FLIGHT DECK work. So I think we play it the same way all over again and are thrilled to see the resiliency in demand and expect that, that gives us -- helps give us a little bit of a lens on how the second half is likely to evolve.

Our next question comes from David Strauss with Wells Fargo.

Good morning. I wanted to see if you could just touch on your expectations for the shop visit profile from here. I think over 50% growth first half of the year. I think you had talked about a compounding kind of -- at 25% here. So if you could just revisit that, if you could also just touch on these durability upgrades, the durability kits, how that's kind of factoring into all this? How long it's going to take you to get through kind of upgrading the existing fleet? And how does that influence numbers? Are you effectively pulling forward work today that you might see now in the future with these durability upgrades?

So David, let me start and then I'll hand it to Larry to talk a little bit about the benefits that we are seeing from the durability upgrades. So I think on shop visits, as you said, we are expecting the shop visits to probably grow at kind of a 25 percentage CAGR from now to 2030. It's all a function of the installed base that's largely out there and will continue to grow over the next couple of years. But most of the engines that we're shipping now are probably not going to come in for a shop visit between now and 2030. So it's largely a function of the installed base that exists in the globe today. So with that, the big change that we are going to see is that our external channel is going to continue to grow. Our external channel has gone from like sub-10% of our overall be services portfolio to call it mid-teens right now, and we expect that to grow to, say, 30% by the time we get to 2030. So I think that's the transition you're going to see here and we are seeing the benefit of that. As I said in my prepared remarks, we saw spare parts growth from that channel contributing to our second quarter revenue growth as well. So that will continue to build and all we are doing on our side is continuing to invest to build more capacity and then we're adding more channel partners. And the other part is that on the cost side, we do expect continuous reduction in our shop as it costs from 2 main things. One, the fact is that we will be leveraging our fixed cost investments more as volume continues to grow. And then the second part is that we are working really hard on repairs. Our repair CAGR from this year is more than 20%. So we're investing in repairs to bring that shop visit cost down. Because, as you know, repairs help both with the turnaround time and the cost. So and then obviously, the growth of external channel helps a little bit with mix. So that's kind of the trajectory that we are seeing between now and 2030.

David, I would just maybe step back on the durability kit for a moment, whether it be at IATA a few weeks ago, whether it's a recent customer survey that we've done. I think we're encouraged with some of the feedback we're getting. Internally, we've said 1 of our priorities for the year is to be more customer-driven to really see ourselves as our customers do. That sounds obvious, but it's really helped us, I think, see some areas of opportunity, certainly improving durability and time on wing, front and center. I think from a LEAP 1A perspective. We now have over 40% of the fleet equipped with the durability kit. And the performance has been quite good, right? We've talked about this being the unlock for a doubling of the time on wing putting us in line with the CFM56, really encouraged in that regard. Now we have certification for the LEAP-1B durability kit. So that will give us the opportunity through the back half of this year to really work through the industrialization plan and give us a full cutover, both with respect to the aftermarket and new make really in 2027. It really won't be something that will trigger an acceleration of work. I think we've talked in the past that the fleet retrofits really will be a multiyear effort. Those engines are due to come in for their first shop visit on a relatively predictable schedule. I don't think you're going to see many engines come in early for the durability kit. So really in the early 2030s until we can look at both the Fleet 1A and LEAP 1B fleets as being fully retrofit. But again, certification is a big step we'll work with the industrialization, encouraged by the 1A field performance. And over the next several years, we'll, I think, be in a much better place in this regard.

Our next question comes from Ronald Epstein with Bank of America.

I was wondering if you both mentioned work scope in your comments about the future growth in the business. Larry, could you give us just more of a feel what you're seeing there and what you expect to see in work scope? And then I've got a follow-up.

Sure. Well, again, in many respects, be it on the wide-body side, on the narrow-body side, it really is a function of the natural aging of the installed base. You think about the growth platforms, Ron, whether it be LEAP whether it be the NX, we're really moving from that quick turn, that early check up, check in to the first performance restoration shop visit. Even with some of the older platforms, you look at the GE90, for example, 70% of that installed base has yet to see shop visit too, which has a significant step-up in work scope. So we have, I think, real direct visibility. We obviously need to plan our own capacity requirements. The airlines need to work through the removals and any third-party work that may be required. I think that is really why we talk about this. Now when you look at the CFM56, even obviously, the legacy narrowbody platform -- it's still a relatively young fleet, and we'd argue with a lot of life left in it. There are fewer long-term service agreements on those engines than we would see in the widebody segment. But 30% of that fleet hasn't seen the first shop visit, 2/3 haven't even seen the second shop visit. So we think about CFM56 as the older platform, it is. But as we work through next several years, I think we'll see those nations come back. And again, that structural support that tailwind will be helpful.