Third quarter a slight improvement for Safran as efforts to reduce cost base intensify

Safran third quarter results

Safran has reported a slightly improved third quarter, with revenue down 44.5 per cent on a reported basis compared to the year-before period, to €3,382 million. Revenue fell 42 per cent on an organic basis.

The company’s improved third quarter was most noticeable in September, and was driven by services for civil engines, and by a slight upturn in propulsion and equipment OE activities.

Safran 3Q and 9M revenue
Safran third quarter and nine month revenue. Click to enlarge.

As of 25 October, weekly fleet cycles for the CFM56 engine manufactured by CFM International (a 50/50 joint venture between Safran and GE Aviation) were down 48 per cent year-on-year, improving from the 52 per cent fall at the end of July.

Weekly fleet cycles for CFM’s LEAP engine were down 15 per cent year-on-year, improving from 23 per cent at the end of July.

CFM International delivered 172 LEAP engines in the third quarter, compared with 455 in the same period of 2019. That brought total deliveries to 622 in the first nine months of 2020, compared with 1,316 by the same time in 2019.

CFM56 engine deliveries reached 123 in the first nine months of 2020, of which 39 were in the third quarter. Last year, 327 engines had been delivered by the same period, with 69 coming in the third quarter.

Safran reported a 41.8 per cent decrease in civil aftermarket revenue for the first nine months of 2020, with a 56.2 per cent decline in the third quarter. However, the company noted that the decrease in spare parts sales for high thrust engines, notably GE90, and service contracts was less than anticipated in the third quarter.

Safran key figures
Safran key third quarter figures. Click to enlarge.

Third quarter revenue in Safran’s Propulsion division dropped 45.9 per cent from services (civil aftermarket) as well as OE volumes (civil engines).

Aircraft Equipment, Defense and Aerosystems sales decreased by 33.6 per cent due to OE sales for wiring, nacelles, avionics and to a lesser extent landing systems activities. Within services, landing gear, carbon brakes and nacelles activities and to a lesser extent Aerosystems suffered the most, Safran said. Electronics & Defense activities were “more resilient” to the crisis.

Aircraft Interiors revenue decreased by 51.8 per cent, with the decline led by the Cabin and Seats businesses (both OE and services) and to a lesser extent Passenger Solutions activities.

“After a second quarter strongly hit by the impacts of the Covid-19 crisis on all activities, the third quarter has seen a lesser deterioration,” said Safran’s CEO Philippe Petitcolin.

“Thanks to the efforts of Safran teams worldwide, the implementation very early in the year of an ambitious adaptation plan has been key in a context of a prolonged air traffic crisis, which allows us to confirm our financial targets for the end of the year.

“More than ever, we keep cutting costs while preserving our technological roadmaps. I am convinced that innovation will be central to emerging from this crisis.”

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