GE stock falls 4% despite earnings beat as fuel costs and weaker flight outlook weigh

GE Aerospace shares fell on Tuesday even after it reported stronger-than-expected first-quarter results, driven by robust demand for commercial aviation and military technologies, as rising fuel costs and geopolitical tensions weighed on its outlook.

The company posted adjusted earnings of $1.86 per share, ahead of analyst expectations of $1.60, according to FactSet.

Revenue rose 25% year-on-year to $12.39 billion, while total orders jumped 87% to $23 billion.

Net income from continuing operations stood at $1.93 billion, broadly in line with the same period last year.

Despite the strong start to the year, GE cautioned that elevated crude oil prices, constrained fuel availability, and slowing global economic growth could weigh on performance in the coming quarters.

The company lowered its forecast for global aircraft departures, now expecting them to remain flat or grow in the low single digits in 2026, down from earlier projections of mid-single-digit growth.

Departures in the Middle East are now expected to decline in the low double digits.

These concerns sent GE shares down about 4% in early trading, as investors reacted to the softer outlook.

Commercial and defence demand fuels growth

Growth was led by GE’s commercial engines and services business, where adjusted revenue climbed 34%, and orders surged 93%, reflecting strong global air travel demand.

The defence and propulsion technologies segment also performed well, with orders rising 67% amid heightened military spending.

Geopolitical tensions, including the ongoing conflict in the Middle East, have increased demand for defence equipment.

A recent budget proposal by Donald Trump outlined $1.5 trillion in defence spending for fiscal 2027, including $350 billion for critical munitions, potentially benefiting companies like GE that manufacture propulsion systems.

Air travel demand remains resilient

Chief Executive Larry Culp had earlier highlighted strong travel demand as a key driver for the business.

While airlines have raised ticket prices in response to higher fuel costs, demand has so far held steady.

Delta Air Lines recently said that bookings remain strong across both business and leisure segments, suggesting that consumers continue to prioritise travel despite higher fares.

Analysts also see limited immediate risk to GE’s core operations.

Ken Herbert of RBC said in a preview report that the near-term impact of Middle East travel disruptions on GE’s commercial services business is likely to be modest.

Guidance maintained as performance trends higher

GE maintained its full-year guidance, forecasting adjusted earnings between $7.10 and $7.40 per share and operating profit of $9.85 billion to $10.25 billion.

The company said first-quarter performance puts it on track toward the higher end of these ranges.

For 2026, GE continues to expect revenue growth in the low double digits, supported by sustained demand across its commercial and defence segments.