“We are not baking that in for the full year—full year, we are expecting service margins to be flat—but it is a good start to the year.”

In context

“about the margins, we baked in kind of flattish margins for the year. If you think about the growth for the year—the $4 billion of growth that we are now expecting—keep in mind, the first quarter grew by about $2 billion, and we are expecting high-teens growth in the second quarter. That gets us closer to two thirds to three fourths of the growth being in the first half of the year. We feel good about the growth rates that we have for the year, and that should support the flat margin expectations that we have for the business. What is happening in the year, as we have discussed previously, is that we are getting good support from our services growth—that is dropping through at a healthy clip. In the first quarter, service margins were actually up year over year. That was a positive trend. We are not baking that in for the full year—full year, we are expecting service margins to be flat—but it is a good start to the year. That positive drop-through from services is getting offset by the OE growth that we saw. For the full year, we expect deliveries to be up 15%. While both spare engines and installed engines are going to be up for the year, the growth is primarily going to be driven by installed engines, and then we have 9X shipments. Put all that together, and we expect flattish margins for the year for CES. As you go outside the year, we spoke about the LEAP margin trajectory earlier to Scott’s question. We expect LEAP margins to approach overall CES levels of service profitability in the next couple of years. 9X losses should also peak by the time we get to 2028, given that we are driving a 50% production cost reduction in 9X. So LEAP margins improving and 9X headwinds peaking in 2028—beyond that is whe”