Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your experience. Save up to 40% More details

Safran stands firm on jet output, reviews part of Zodiac

EconomyDec 02, 2021 06:30AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
© Reuters. FILE PHOTO: The logo of Safran is seen outside the company's headquarters in Issy-les-Moulineaux near Paris, France, January 2, 2019. REUTERS/Gonzalo Fuentes/File Photo

By Tim Hepher

PARIS (Reuters) -Jet engine maker Safran (PA:SAF) said the worst of the coronavirus crisis was over but took a cautious view on long-term airline traffic in a continuing stand-off with Airbus over proposed increases in jetliner production.

The French aeronautics supplier also placed almost a third of its recently acquired Zodiac Aerospace business under review, while targeting higher revenues and margins over five years.

CEO Olivier Andries said Safran remained committed to building enough engines to allow Airbus to meet a firm output target of 65 A320s a month in 2023, up some 50% from crisis-hit levels, but that it was too early to commit to more.

Airbus has asked suppliers to explore rates as high as 75 a month by 2025 based on its forecasts of strong demand for the sought-after medium-haul category as the pandemic eases.

A decision on this would need to be made by mid-2022.

Engine makers are cautious about joining planemakers, notably the current volume leader Airbus, in raising new output because they fear it will accelerate aircraft retirements and dampen lucrative repairs demand demand, or else be short-lived.

Safran co-produces engines for the single-aisle category with General Electric (NYSE:GE) through their joint venture CFM, which according to Safran has 72% of the market against rival Pratt & Whitney, owned by Raytheon Technologies (NYSE:RTX).

Andries said Safran sees air traffic demand growth in the medium-haul sector for A320s and Boeing (NYSE:BA) 737s rebounding to 4.9% a year on average between 2023 and 2025.

But 20-year annual growth for all traffic combined, of which medium-haul has the biggest chunk, would average 2.9% compared with forecasts from Airbus and Boeing at or close to 4%.

"We have a (demand) vision which is more prudent than the planemakers," Andries said, adding "3% is not nothing, it is very significant and will stay above world GDP."

Safran did not rule out targeted acquisitions where they make sense while considering shedding some ex-Zodiac activities.

Safran agreed to buy Zodiac in 2017 to create the world's third largest aerospace supplier after cutting its offer following a string of profit warnings from the aircraft seat maker, and completed the deal the following year.

Safran said ahead of an investor presentation on Thursday that a re-assessment of the legacy Zodiac business had led to 70% of the business "confirmed as core and 30% under review."

Safran declined to identify the activities under review, but recently-appointed CFO Pascal Bantegnie said weakly defended or least profitable activities might be sold.

The renamed Safran Seats and Safran Cabin businesses, part of the company's Aircraft Interiors division, are both set to reach breakeven in 2022 and double-digit profitability by 2025 and "take advantage of the recovery of a severely hit market".

Safran also outlined group targets for 2021-2025 including compound average growth of 10% or more in revenues and around 15% in the widely watched aftermarket for civil jet engines.

It forecast an operating margin of 16-18% by 2025 and said it would return to a 40% dividend payout for its 2022 finances.

Safran stands firm on jet output, reviews part of Zodiac

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email