Specialist
Former VP Safran Aerosystems at Safran SA
Agenda
- Overview of Safran's (PAR: SAF) aerosystems segment portfolio, competitive positioning and 2021 capital markets day review
- Recovery in commercial aerospace and uplift analysis for Safran, including Leap engine platform and Zodiac legacy portfolio
- Growth opportunities in aerosystems and propulsion including RISE (Revolutionary Innovation for Sustainable Engines) programme
- Safran’s defence portfolio, helicopter segment and M&A outlook
Questions
1.
What is your assessment of the operating environment in aerospace and defence for OEMs [original equipment manufacturers] such as Safran?
2.
For the commercial propulsion segment, Airbus is targeting a 65 production rate of the A320 by 2023. Do you think that is an aggressive or feasible goal of meeting Airbus’s ramp-up target, especially considering supply chain challenges and Safran’s positioning? What could be the challenges?
3.
What do you think of Safran’s narrow-body positioning? Can the company take advantage of the current market trend that favours narrow-bodies?
4.
What’s your take on Safran’s partnership with GE – the CFM JV? What is the benefit of producing the internal and external, and having those capabilities vs just one or the other?
5.
How does the Leap compare to Pratt & Whitney’s GTF [geared turbofan] engine?
6.
Safran is targeting an increase in the aerospace propulsion EBIT margin to 20%-plus in 2025, from around 15.6% – as reported in its December 2021 capital markets day. How achievable is that target and what are the potential drivers? Where is that expansion coming from over the next three years?
7.
How profitable could the Leap engine platform eventually be for Safran, considering engines run on the power-by-the-hour contract type and profitability differs throughout the delivery, the usage and aftermarket? Negative margin is expected through 2022-23 and approaching break-even no later than 2025. Could you discuss Safran’s future respective contracts?
8.
What aftermarket considerations are there? Safran has indicated different models for the CFM56 vs the Leap, with the CFM56 operating through selling spare parts and materials, as well as longer-term service agreements with the Leap. How might the company successfully get longer-term service contracts?
9.
What do you make of Safran’s review of the legacy Zodiac activities, specifically for the 30% which might not be core? Which areas of the Zodiac legacy portfolio have been incorporated most successfully? Where might the portfolio still need perfecting or optimising?
10.
What is your assessment of Safran’s acquisition strategy, especially after Zodiac? How successful are the company’s integrations and portfolio synergies?
11.
How might Safran’s Zodiac acquisition help the company be a leader in electrical power distribution and start electric aircraft? How might this hybrid electric propulsion system come into the portfolio, especially given the push for sustainability and next-gen engine propulsion?
12.
Do you think having the lower-carbon or the hybrid options and efficient portfolio will be a significant differentiator for Safran? Would customers pay extra or prioritise that?
13.
What do you make of Safran’s RISE [Revolutionary Innovation for Sustainable Engines] programme, which is described as a disruptive technology towards efficiency and lower-energy burn? How successful could it be and how differentiated is its ambition?
14.
The Rafale fighter jet has recently exported well – the UAE signed a deal for 80 aircraft – but what’s your assessment of Safran’s defence portfolio and success in the military market?
15.
What is Safran’s positioning in helicopter turbines? What are the respective growth opportunities?
16.
How might Safran’s M&A activity evolve? The company recently expanded its sensor and defence electronics segment, but do you expect this growth or focus to continue? What could be next for portfolio development?
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