Safran Bullish On Zodiac Deal, Silvercrest and Leap Engines

 - February 25, 2017, 8:58 AM
French engine and aerospace systems group Safran announced higher revenue and profit for last year. [Photo: Safran]

French aerospace group Safran anticipates a busy 2017 with further growth driven by its new generation Leap airliner engines, as well as the long-awaited certification of the Silvercrest business jet powerplant and the prospect of bidding another new turbofan for Boeing’s envisioned middle-of-the-market aircraft. Announcing positive 2016 financial results in Paris on February 24, Safran’s leadership also insisted it is pressing ahead with the acquisition of aircraft equipment maker Zodiac despite opposition from shareholder TCI Fund Management.

Last year, Safran boosted revenues by 1.6 percent to €15.78 billion (with 3.9 percent organic growth). Operating income increased 5.4 percent on 2015 to reach €2.4 billion and its 15.2 percent operating margin was 50 basis points higher. Much of this achievement was down to Safran’s CFM International joint venture with GE Aviation, which last year sold another 1,801 of its new Leap family engines and delivered 1,693 of the existing CFM56 turbofans (and secured 876 new orders).

Among anticipated highlights in 2017 activity, Safran indicated that the long-awaited first flight of C919 narrowbody being developed by China’s Comac group will be achieved in April or May. The aircraft is powered by the Leap-1C engine, which achieved type certification in December.

Meanwhile, Safran CEO Philippe Petitcolin said that the Silvercrest engine, set to power Dassault’s Falcon 5X and Cessna’s Citation Hemisphere business jets, is on course to complete type certification in spring 2018.

Petitcolin also reported that the acquisition of struggling Zodiac is on track to be completed by the end of 2017, pending regulatory approval. He predicted that under Safran management, the France-based group, which has been bedeviled by serious program cost overruns and technical difficulties on programs such as seating for the Airbus A350, can be returned to operating profits of around 14 percent by around 2019 to 2020 through rationalization.

Zodiac has too many small factories with just 15 or 20 employees, mainly in the U.S. There is much to do in terms of rationalizing that [structure],” Petitcolin told reporters.  Safran intends to restructure around 20 of the existing 100 sites.

Meanwhile, Petitcolin reported that Safran has held talks with Boeing around a possible collaboration for CFM to provide an engine of at least 50,000-pounds thrust for the middle-of-the-market airliner. “Beyond the engine, we can also offer our expertise in other areas such as landing gear, nacelles and cabling,” he said.

Separately, Petitcolin indicated that Safran does not accept Airbus’s contention that it should have to shoulder additional expense associated with the European airframer’s continued cost-overrun problems with the A400M military transport aircraft. “We have a contract [with Airbus Group] and we want to fully apply it,” he said. “We had problems in the past with the Avio's gearbox for the TP400 engine, which have been partly solved with a temporary solution in 2016. We are working over a definitive solution, which will be operational by mid-2017. Asking us to pay more is unacceptable.”

Asked to comment on how the “America First” trade policies of U.S. President Donald Trump’s new administration might impact international aerospace programs, Petitcolin acknowledged that this could, potentially, result in changes in investment policy in the company's Mexican facilities, where it now employs 6,000 people. However, the Safran CEO added that he does not expect Trump’s policies to undermine the CFM joint venture, which produces engines in both the U.S. and France.