CFM International’s planned increase in the rate of Leap engine deliveries this year could face a further downward revision if Boeing does not resolve its 737 Max production issues, one half of the narrowbody propulsion joint venture has cautioned.
Having shipped 1,570 Leaps in 2023, plans disclosed in early 2024 called for CFM to increase output this year by 20-25%, to around 1,884-1,962 engines.
But faced with what Safran – a partner in CFM alongside GE Aerospace – describes as “soft aircraft production levels” in the first quarter, the joint venture now says it will only build 10-15% more Leap engines than it did in 2023.
That will result in CFM producing 150-120 fewer engines than forecast, Safran chief financial officer Pascal Bantegnie told analysts on 26 April during a first-quarter performance update.
Olivier Andries, the French aerospace giant’s chief executive, says the output revision “primarily” affects the Leap-1B for the 737 Max, rather than the -1A variant for the Airbus A320neo.
Although CFM has continued to supply Leap-1Bs at a rate sufficient to support the airframer’s previous expectations of a ramp-up in Max production, Boeing’s output has been curtailed since the in-flight loss of a door-plug from an Alaska Airlines Max 9 in early January.
Since then, production has slowed to implement additional safety inspections and the US Federal Aviation Administration has capped output at 38 aircraft per month, although the actual rate is below that figure.
In the first quarter, the US airframer shipped just 67 737 Max aircraft, but that total included 17 handed to Chinese airlines, most of which were drawn from a stockpile of undelivered jets built up during the Covid-19 pandemic.
As a result, “the buffer of engines that are at Boeing has increased since the start of the year”, says Andries. That stockpile of uninstalled Leap-1Bs has been factored into CFM’s delivery plans for the remainder of the year, he adds.
However, he notes that the revised guidance of a 10-15% increase is simply “our best estimate”, noting that the situation is “still a little bit foggy”.
“We will see what happens at Boeing in the second quarter and we will see whether or not whether we revise the guidance for the full year.”
Although Leap deliveries were flat year on year – 367 versus 366 in the first quarter of 2023 – Safran’s propulsion unit delivered a robust revenue performance, up 15.4% on an organic basis to €3.1 billion ($3.3 billion), largely driven by aftermarket sales that grew 27.3% year on year to €1.9 billion.
That rate of improvement has been bumped up by the phasing of long-term service contract payments in the first quarter and will “reverse as soon as Q2”, says Bantegnie. However, the aftermarket business will still deliver a 20% year-on-year increase across the whole of 2024, he adds.
Revenue in Safran’s interiors business rose by 23.8% to €676 million, largely due to services, but remains 10% below 2019 levels. Sales to the airframers rose due to the performance of the custom cabin and galleys business “and to a lesser extent seats”.
However, shipments of business-class seats declined to 242 in the quarter, down from 324 in the same period a year earlier. Bantegnie says the fall was due to a combination of certification delays, supply chain issues and some customers delaying delivery “as they expect to take delivery of aircraft later than planned”.
Nonetheless, Safran is maintaining its guidance to achieve break-even at the interiors business this year, with the cabin segment likely generating a small profit.
