How These 5 Aerospace Stocks Earn Money Beyond New Plane Sales
Yahoo! Finance ·
Key points
- GE Aerospace, through the CFM International joint venture with Safran, dominates the aircraft engine market, with the LEAP engine powering the Boeing 737 MAX and Airbus A320neo families, and a growing installed base that is expected to expand as production ramps continue; engines’ aftermarket revenue accrues from shop visits and overhauls over many decades.
- The company highlights that the LEAP installed base is anticipated to more than double between 2025 and 2030, signaling a sustained long-term income stream from aftermarket services such as maintenance and parts.
- TransDigm derives about 55% of its revenue from the aftermarket, leveraging a strategy of acquiring numerous niche, proprietary parts manufacturers and integrating them into a highly profitable, cash-generating model supported by regulatory pricing power in aerospace.
- Loar Holdings is adopting a similar playbook to TransDigm, focusing on engineered, niche aerospace and defense components, with leadership having prior ties to McKechnie Aerospace, suggesting potential scalability if success mirrors TransDigm’s track record.
- AAR Corp provides maintenance, repair, and overhaul services plus software to a broad customer base including airlines, defense, and OEMs, and is expanding via the MRO Holdings acquisition to broaden geographic reach and service offerings.
- RTX’s commercial aftermarket business, centered on Collins Aerospace and Pratt & Whitney engines, benefits from an installed base across the Airbus A320neo family, reinforcing a long tail of aftersales revenue alongside its OEM activities.
- Overall, the sector offers a durable investment theme as production ramps, fleets age, and aftermarket demand remains resilient, with the article positioning these names as representative of multi-decade revenue streams rather than one-off OEM cycles.
Summary
Aerospace aftermarket players generate recurring, long-term revenue that can sustain valuations, with five names—GE Aerospace, TransDigm, Loar Holdings, AAR Corp, and RTX—highlighted for their exposure. The piece argues that aftermarkets can outsize OEMs in profitability due to enduring shop visits and overhauls, aided by tight regulatory control. GE Aerospace benefits from CFM International’s LEAP engine base on the 737 MAX and A320neo, foreshadowing decades of service revenue as engines age. TransDigm’s 55% aftermarket mix and aggressive niche acquisitions illustrate a model of sustained cash flow and growth, while Loar signals a replicate strategy. AAR and RTX further anchor revenue through MRO, parts distribution, and engine-specific services, suggesting a multi-decade, multi-actor pathway to durable upside as production ramps persist and fleets age, with investors advised to focus on long-term momentum.
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