What's Happening?
Safran has reported a significant increase in the delivery of CFM International Leap engines, with a 10% rise in the first half of the year, totaling 729 units. This improvement in production rates has contributed to a near-17% increase in propulsion revenues, reaching €7.5 billion. The company delivered 410 Leap engines in the second quarter, marking a 30% increase from the first quarter. CEO Olivier Andries noted improvements in the supply chain, forecasting a 15-20% increase in total Leap deliveries for the year. The Leap engines are used in Airbus A320neo, Boeing 737 Max, and Comac C919 aircraft. Despite a shortage of Leap-1A engines affecting Airbus, Safran's aftermarket sales rose by 21%, driven by CFM56 requirements and Leap spare-engine ratios.
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Why It's Important?
The recovery in Leap engine deliveries is crucial for the aviation industry, particularly for manufacturers like Airbus and Boeing, which rely on these engines for their aircraft. The increase in deliveries and aftermarket sales indicates a strengthening supply chain, which is vital for meeting production demands and reducing aircraft backlogs. Safran's improved financial performance and cash generation highlight the importance of robust civil engine aftermarket activity, which supports the company's operating margin and financial guidance. This development is significant for stakeholders in the aerospace sector, including airlines and aircraft manufacturers, as it impacts production schedules and operational efficiency.
What's Next?
Safran's forecast for increased Leap engine deliveries suggests continued improvements in the supply chain, which could alleviate the current shortages faced by Airbus. The company's raised full-year guidance indicates confidence in sustaining this positive momentum. Stakeholders will be watching for further developments in supply chain management and production rates, as these factors will influence aircraft delivery schedules and industry growth. Additionally, the ongoing demand for aftermarket services and spare parts will likely continue to drive revenue growth for Safran.
