GE sees fuel prices higher than they are now through the summer due to the Iran conflict

By Tomi Kilgore

GE Aerospace's stock turns lower as the full-year outlook is tempered by the Iran conflict, despite a big first-quarter earnings beat

GE cut the outlook for departures by aircraft using GE engines because of the Iran conflict.

Shares of GE Aerospace fell Tuesday, after the commercial-engines and defense giant kept its full-year outlook intact, even as first-quarter earnings beat expectations by a wide margin, due to impact of the Iran conflict.

Although GE said results were trending toward the high end of guidance ranges, the outlook was tempered as the company expects that fuel prices will stay above current levels through the third quarter, fuel availability will be reduced and air travel demand will by hurt as global economic growth will slows.

As a result, the company lowered its outlook for departures, or flights by aircraft using GE-built engines.

The first thing CEO Larry Culp addressed on the post-earnings call with analysts was the Middle East hostilities, saying he was "embracing today's reality," while assessing multiple potential scenarios. According to a FactSet transcript, he said GE's current assumption is that "the conflict, and its effects, continue through the summer."

On the bright side, orders received for future deliveries remained strong through March, with GE's commercial engines and services business seeing a 93% jump in orders, and defense and propulsion technologies seeing a 67% bump. And Chief Financial Officer said on the earnings call that after the third quarter, fuel prices are expected to fall back to current levels by the end of the year.

GE's stock (GE) slumped 5.6% on Tuesday, reversing an early premarket gain of as much as 4.6% soon after the results were reported.

Operating profit for the first quarter grew 18% from a year ago to $2.5 billion, above the average analyst estimate compiled by FactSet of $2.24 billion. Adjusted earnings per share grew 25% to $1.86 to beat expectations of $1.60.

Total revenue rose 25% to $12.39 billion, above the FactSet consensus of $11.34 billion, as commercial engines and services revenue increased 34% to $8.92 billion and defense and propulsion technologies revenue was up 19% to $3.21 billion.

Free cash flow increased 14% to $1.7 billion, above expectations of $1.39 billion.

For 2026, GE still expects revenue growth in the low double-digit percentage range and kept its guidance ranges intact for operating profit at $9.85 billion to $10.25 billion and for adjusted EPS of $7.10 to $7.40. The company said because of the strong first-quarter performance, results were trending toward the high end of the guidance ranges.

But for global 2026 departures, the company now expects them to be flat to up in the low-single-digit percentage range, down from previous guidance of growth in the mid-single-digits, as the outlook for Middle East departures was cut to a decline in the low-double-digit range from an increase in the high-single-digit range.

GE's stock has lost 5.5% in 2026, while the S&P 500 index SPX has gained 4.2%.

-Tomi Kilgore

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

04-21-26 1639ET