The aerospace industry is currently experiencing a notable divide in earnings, with suppliers and lessors significantly outperforming aircraft manufacturers (OEMs) and airlines. Engine makers, having taken on substantial capital risk, have captured an estimated 85% of industry earnings, which increased by 19% to $38 billion in 2025. This dominance is expected to persist through 2026, with engine and heavy maintenance, repair, and overhaul (MRO) providers maintaining strong positions. In contrast, aircraft OEMs remain near break-even, and aerostructures suppliers are still facing losses.
TransDigm Group, a key aerospace supplier, reported a strong fiscal third quarter in 2026, leading them to raise their full-year guidance. The company anticipates net sales between $10.47 billion and $10.55 billion, an increase of 19% from fiscal 2025. Their EBITDA As Defined is projected to be between $5.49 billion and $5.55 billion, up 16% from 2025, with an impressive margin of approximately 52.5%. Adjusted earnings per share are expected to rise by 10% to a range of $40.62 to $41.46. This growth is driven by double-digit increases across commercial aftermarket, commercial OEM, and defense revenue channels, with commercial aftermarket growth remaining particularly strong at 17%.
Meanwhile, airlines are still grappling with the impact of a significant fuel shock. Despite a 26.5% increase in airfares in June 2026 compared to June 2025, major carriers like Delta have only recovered about 60% of their fuel cost increases. United and American Airlines each project an additional $6 billion in fuel costs for 2026, an increase of over 50% from 2025. The International Air Transport Association (IATA) forecasts jet fuel to average $152 per barrel in 2026, up from $90 in 2025, which could push fuel expenses from 25.4% to 31.4% of airline operating costs, potentially halving global airline net profit from $45 billion to $23 billion. This scenario, alongside rising interest rates, could put further pressure on airline profitability and lease economics, especially as aircraft delivery rates normalize.
