Melrose Aerospace Revenue Rises on Strong Engines and Aftermarket Demand

Melrose Aerospace

Melrose aerospace revenue increased in 2025 as strong engine demand and resilient aftermarket activity supported growth across the GKN Aerospace platform. The UK-based company reported overall revenue of £3.58bn, up 8pc year on year and within its full-year guidance range.

Melrose aerospace revenue benefited most from the engines segment, where sales rose by 15pc to £1.63bn. Original equipment revenue increased by 16pc, while aftermarket revenue grew by 14pc, reflecting continued demand from aerospace and defence customers.

Melrose aerospace revenue also gained support from the airframes division, where revenue rose by 3pc to £1.95bn. Defence platforms were the key driver, with 15pc growth helping offset weaker civil revenue linked to lower build rates at Airbus and Boeing.

Engine and Defence Demand Offset Civil Aircraft Weakness

Melrose’s 2025 performance shows how aerospace suppliers are benefiting from strong engine programs and defence demand even as civil aircraft production remains uneven. The company adjusted civil airframes production to match slower build rates at Airbus and Boeing, which continued to affect the wider supply chain.

Aftermarket demand remained an important growth pillar. Airlines are operating ageing fleets for longer because new aircraft deliveries remain constrained, increasing demand for maintenance, repair, overhaul, and replacement parts. This supports revenue for suppliers with exposure to engines and service-linked components.

Melrose expects stronger momentum in 2026. The company set revenue guidance at £3.75bn-3.95bn, based on higher original equipment production and continued aftermarket strength. That outlook suggests aerospace demand remains healthy, even though production schedules still face execution risk.

Titanium Inventory Signals Aerospace Supply Chain Imbalance

Melrose’s high inventories point to a continuing mismatch between material procurement and aircraft production ramp-ups. Slower-than-expected build-rate increases over the past two years have led to titanium and other material inventory accumulating across the aerospace supply chain.

This matters because aerospace materials require long qualification cycles, strict traceability, and complex processing routes. When build rates shift, inventory imbalances can appear from raw materials to finished parts. Titanium, nickel alloys, forgings, castings, and machined components are especially exposed.

US tariffs also affected second-quarter deliveries after being introduced in April. Melrose recovered most of those losses in the second half, but the episode shows how trade policy can disrupt aerospace flows even when underlying demand is strong.

The Metalnomist Commentary

Melrose’s results show that aerospace demand remains strong, but the supply chain is still not synchronized. Titanium inventory build-up is a warning that material suppliers and component makers must manage ramp-up risk as carefully as demand growth.

Melrose Industries Reports 26% Engine Revenue Growth on Aftermarket Strength in 2024

Melrose Industries

Defence spending and additive fabrication boost GKN Aerospace unit despite civil production headwinds.

Melrose Industries, the UK-based parent of GKN Aerospace, reported a 26% rise in engine division revenue to £1.46 billion ($1.88 billion) in 2024. The company’s engine aftermarket business grew by 32%, helping push operating profit up 40% to £422 million.

Aftermarket demand surged due to increased defence contracts and maintenance-related services, as commercial aircraft deliveries remained constrained. This dynamic benefited Melrose’s service business while placing pressure on original equipment (OE) volumes.

Defence Demand and OEM Partnerships Support Outlook

Melrose highlighted strong defence sector momentum, which offset civil market weakness. While structures revenue rose 3% to £2.01 billion, it declined 5% when adjusted for exited business. Civil aircraft destocking and sluggish OE build rates—notably at Boeing and Airbus—continued to limit growth.

The company's revenue mix remains 72% civil to 28% defence, but with EU and NATO nations ramping military budgets, defence is set to play a larger role in 2025 and beyond.

Melrose also made strategic strides in additive fabrication, delivering its first fully 3D-printed demonstrator case for CFM International’s RISE engine programme. It has secured long-term contracts with Pratt & Whitney and GE Aerospace, positioning itself as a key player in next-generation aerospace components.

2025 Outlook: Growth to Moderate Amid Supply Chain Constraints

Melrose projects 2025 revenue between £3.55–3.7 billion, but cautioned that supply chain bottlenecks may slow growth, especially in the structures business. However, continued aftermarket expansion and innovation in fabrication techniques offer upside for the engine division.

With strong defence tailwinds, additive manufacturing adoption, and established OEM ties, Melrose is well-positioned for strategic growth across core aerospace segments.

US-UK Trade Deal Grants Tariff Exemptions for Rolls-Royce Engines and Aerospace Parts

GKN Aerospace

The newly announced US-UK trade deal provides significant tariff relief for Rolls-Royce jet engines and aerospace components entering the United States market. This bilateral agreement exempts specific UK aerospace products from the blanket 10% tariff that President Donald Trump implemented on April 2nd, creating substantial cost savings for transatlantic aerospace trade.

Strategic Impact on Boeing-Rolls-Royce Partnership

US Commerce Secretary Howard Lutnick confirmed that Rolls-Royce engines sold to Boeing will benefit from tariff-free access to American markets. The exemption directly impacts key engine programs, including the Trent 1000 engine used in Boeing's 787 Dreamliner aircraft. Meanwhile, Rolls-Royce's Trent 800 engine, which powers the Boeing 777, will also benefit from reduced trade barriers despite production cessation.

However, the trade deal's scope regarding other UK aerospace manufacturers remains unclear at this time. Companies like GKN Aerospace, a subsidiary of Melrose Industries, await clarification on whether the tariff exemptions extend beyond Rolls-Royce products. Therefore, GKN Aerospace and similar suppliers face uncertainty about their component exports to US aircraft manufacturers.

Market Response and Industry Implications

Financial markets responded positively to the US-UK trade deal announcement, with both Rolls-Royce and Melrose shares rising over 2% on the London Stock Exchange. This market reaction suggests investors anticipate broader aerospace sector benefits beyond the specifically mentioned engine exemptions. As a result, the tariff relief could significantly improve profit margins for UK aerospace companies competing in the US market.

The timing of the trade deal coincides with major aircraft orders that demonstrate strengthened US-UK aerospace cooperation. International Airlines Group (IAG) ordered 32 Boeing 787-10 aircraft for British Airways, with options for 10 additional planes scheduled for delivery between 2028-2033. Additionally, IAG ordered 21 Airbus A330-900neo aircraft for deployment across its European airline subsidiaries.

However, specific details about which aerospace parts qualify for tariff exemptions remain undisclosed by US trade officials. The lack of detailed information creates uncertainty for suppliers throughout the UK aerospace supply chain, including manufacturers of compressor components, fan cases, and exhaust structures.

The Metalnomist Commentary

This targeted tariff relief underscores the strategic importance of aerospace supply chains in US-UK trade relations and highlights how geopolitical considerations increasingly influence critical mineral and advanced manufacturing sectors. The exemptions could reshape competitive dynamics in the global aerospace market, particularly benefiting UK manufacturers while potentially disadvantaging competitors from other nations still subject to US tariffs.