GE Aerospace Lands $5 Billion U.S. Air Force Contract to Supply F110 Engines for F-15 and F-16 Jets

GE Aerospace’s $5 Billion U.S. Air Force Deal: A Strategic Power Move in Defense Aviation

Breaking Down the $5 Billion Contract

GE Aerospace has secured a major win—a U.S. Air Force Indefinite Delivery/Indefinite Quantity contract valued at up to $5 billion for its F110-GE-129 engines. These engines, which power F-15 and F-16 fighter jets, play a critical role in military operations across allied nations.

The contract, effective through December 2030, will see GE Aerospace delivering both installed and spare engines, modernized engine monitoring systems, and associated support services. With an initial funding allocation of $41.7 million, production will take place in Cincinnati, Ohio, and San Antonio, Texas.

This agreement not only solidifies GE Aerospace’s longstanding partnership with the U.S. Air Force but also underscores the global reliance on the F110 engine, which has accumulated over 11 million flight hours and boasts the highest thrust in its class.

Financial Strength: What This Means for GE Aerospace

Revenue and Growth Momentum

The deal arrives at a pivotal time for GE Aerospace, following a robust financial performance in 2024. The company reported annual revenue of approximately $38.7 billion, an operating profit of around $7.6 billion, and a significant free cash flow boost. Orders surged 46% in Q4, demonstrating strong demand across both commercial and defense markets.

Aftermarket Services: A High-Margin Play

Approximately 70% of GE Aerospace’s adjusted revenue stems from aftermarket services—maintenance, repair, and spare parts. This contract not only secures engine sales but also ensures a steady stream of follow-up service revenue, strengthening GE’s long-term profitability.

Independence and Efficiency Gains

Since its spinoff from General Electric, GE Aerospace has focused on streamlining operations and improving supply chain efficiency. Programs like its “Flight Deck” lean model have enhanced supplier performance, expanded production capacity, and optimized inventory management—key factors in meeting the increased demand generated by this contract.

Strategic Impact: Strengthening GE’s Global Defense Presence

Reinforcing Market Leadership

This deal underscores the enduring trust in GE Aerospace’s F110 engine, a mainstay of the F-15 and F-16 platforms. With ongoing military modernization efforts worldwide, GE Aerospace is positioned as the leading supplier for nations looking to upgrade their fighter jet fleets.

Potential for Additional Foreign Military Sales

The contract sets the stage for further deals from allied nations. Countries such as Saudi Arabia, Jordan, and Bulgaria, which rely on U.S. fighter aircraft, could increase orders as they enhance their air force capabilities. This paves the way for additional Foreign Military Sales and broader international defense collaborations.

A Catalyst for Stock Performance

Investor sentiment has been notably positive following GE Aerospace’s recent earnings report and contract announcements. Analysts project continued revenue growth in 2025, with adjusted EPS guidance in the mid-$5 range and a double-digit increase in defense-related revenues. Given the company’s strong balance sheet and operational efficiency, shareholders can expect enhanced value creation through stock buybacks and potential dividend increases.

Challenges and Risks: What Could Slow Momentum?

Execution Risks and Volume Uncertainties

While the contract’s ceiling is $5 billion, actual revenue realization will depend on engine orders fulfilled. IDIQ contracts provide flexibility but also introduce uncertainty regarding the timing and volume of deliveries. Converting these potential orders into tangible sales will be crucial.

Persistent Supply Chain Constraints

Despite recent improvements, supply chain disruptions remain an industry-wide challenge. Any setbacks in raw material sourcing, logistics, or manufacturing efficiency could impact GE Aerospace’s ability to meet contractual obligations on time.

Geopolitical and Budgetary Considerations

FMS orders are tied to defense budgets and geopolitical priorities of allied nations. Economic downturns, shifting government priorities, or diplomatic tensions could delay or reduce the scale of planned purchases. GE Aerospace must navigate these uncertainties while maintaining strategic partnerships.

A Transformational Deal with High Stakes

GE Aerospace’s $5 billion U.S. Air Force contract marks a significant milestone, reinforcing its leadership in military aviation while unlocking new revenue streams. With strong financials, a growing aftermarket services business, and increased demand for defense solutions, the company is well-positioned for future growth. However, execution efficiency and geopolitical stability will determine the full extent of this deal’s impact.

For investors, GE Aerospace presents a compelling case—stable defense contracts, a high-margin aftermarket business, and operational efficiencies that drive long-term profitability. Yet, vigilance is necessary to track supply chain stability and the conversion of IDIQ contract potential into real revenue.

With global defense spending on the rise and the F-15 and F-16 fleets remaining a cornerstone of allied air forces, GE Aerospace is not just winning a contract—it’s shaping the future of military aviation.