v3.26.1
Guarantees
 6 Months Ended
Jun. 30, 2026
Guarantees and Product Warranties [Abstract]  
Guarantees
Note 15: Guarantees
We extend a variety of financial, market value, and product performance guarantees to third parties. These instruments expire on various dates through 2062. Additional guarantees of project performance for which there is no stated value also remain
outstanding. A portion of our third party guarantees are subject to indemnification for our benefit for any liabilities that could arise. As of June 30, 2026 and December 31, 2025, the following financial guarantees were outstanding:
June 30, 2026December 31, 2025
(dollars in millions)Maximum Potential PaymentCarrying Amount of LiabilityMaximum Potential PaymentCarrying Amount of Liability
Commercial aerospace financing arrangements$45 $— $106 $— 
Third party guarantees230 — 248 — 
We have made residual value and other guarantees related to various commercial aerospace customer financing arrangements. The estimated fair market values of the guaranteed assets equal or exceed the value of the related guarantees.
We accrue for costs associated with guarantees when it is probable that a liability has been incurred and the amount can be reasonably estimated. The most likely cost to be incurred is accrued based on an evaluation of currently available facts, and where no amount within a range of estimates is more likely, the minimum is accrued.
We also provide service and warranty policies on our products and extend performance and operating cost guarantees beyond our normal service and warranty policies on some of our products, particularly commercial aircraft engines. In addition, we incur discretionary costs to service our products in connection with specific product performance issues. Liabilities for performance and operating cost guarantees are based upon future product performance and durability and are largely estimated based upon historical experience. Adjustments are made to accruals as claims data and historical experience warrant.
The changes in the carrying amount of service and product warranties and product performance guarantees for the six months ended June 30, 2026 and 2025 were as follows:
(dollars in millions)20262025
Balance as of January 1$1,035 $993 
Warranties and performance guarantees issued118 152 
Settlements(113)(108)
Other(3)7 
Balance as of June 30$1,037 $1,044 
Product and service guarantees incurred in connection with long term production contracts and certain aftermarket arrangements are generally accounted for within the contract estimates at completion.