“Beyond 2028, we should see both losses come down, and therefore the margins get better as well.”

In context

“Rahul Ghai: Kristine, thanks for the question. Let me start, I'll see if Larry wants to add anything here. Overall, as we think about our margin trajectory, what we saw here in the second quarter, what we're experiencing for 2026 is very consistent with whatever we've been talking about. We've got three large issues on margins that we are working our way through. One, really strong installed engine growth, which is absolutely needed given the demand that's out there, also feeds the installed base that Larry spoke a few minutes earlier about what drives the long-term services growth, right? Strong installed engine growth both last year, this year, I'd expect that to continue. LEAP services, as that platform broke even in 2024 on the services side, we are gradually moving up. Margins are getting better this year, both in the first half and expecting full-year margin expansion on LEAP. Overall, we expect, still below overall CES service margins, and that is putting a little bit of pressure on our margins. We expect LEAP services margins to be in line with our total services portfolio by the time we get to 2028. That's kind of the second issue we're dealing with. The third, and perhaps the biggest, is GE9X. Initial units, highest cost units, we started shipping those out last year, more this year. That volume will grow. As we've previously said, we expect those losses to peak by the time we get into 2028. Beyond 2028, we should see both losses come down, and therefore the margins get better as well. Those are the three issues. There's nothing structural that is causing us to have this issue. It is all timing. Even with all these issues that we're dealing with, our margins at the total company level are largely flat. That is because our services portfolio is the biggest part of the portfolio, it's the highest margin, and it drives the highest dollar growth. As those headwinds abate, the inherent mix advantage that we have in our business continues. Overall, both for CES and for the total company, we would expect margin expansion in 2028 and beyond.”