(Reuters) -GE Aerospace raised its full-year profit forecast for the third time this year on Tuesday, driven by strong demand for after-market services from airlines that are relying on older planes to make up for the shortage of newer aircraft.
The company’s shares, however, were down about 5% in pre-market trade as persistent supply constraints have made it harder to keep up with customer demand, impacting its revenue.
GE Aerospace said demand for commercial air travel remains robust, but material availability and supplier issues continue to cause disruptions and have impacted production and delivery of equipment and services.
It sold fewer LEAP engines, which power Airbus and Boeing narrowbody aircraft, in the September quarter compared with a year ago.
The company said its efforts to address supply chain constraints have improved material output from a quarter ago, but added it has more work to do.
“We expect the impact of supply chain constraints and inflation will continue,” it said in a regulatory filing.
GE Aerospace said a strike by factory workers at Boeing, thus far, has not had a “significant” impact on its revenues, earnings and cash flows.
The company expects an adjusted profit of $4.20 per share to $4.35 per share for 2024, compared with its prior forecast of $3.95 to $4.20 per share.
GE Aerospace has a dominant share in the engine market for narrowbody jets and enjoys a strong position in widebodies. More than 70% of its commercial engine revenue comes from parts and services.
A lack of new planes due to production issues at Boeing and Airbus has led to a surge in demand for its after-market services.
Profit at the company’s commercial engines and services segment was up 16% to $1.8 billion on revenue of $7 billion, which rose 8% from a year earlier.
The company said its adjusted profit for the quarter through September was $1.15 per share, compared with $1.14 a share expected by analysts in a LSEG survey.
GE Aerospace’s total revenue rose 6% to $9.84 billion for the third quarter ended Sept. 30.
(Reporting by Rajesh Kumar Singh in Chicago and Shivansh Tiwary in Bengaluru; Editing by Anil D’Silva and Chizu Nomiyama)
