Safran’s chief executive has had to weather a turbulent couple of years since the Sagem/Snecma merger created a diverse telecoms-to-aircraft engines group. But the aerospace parts of the business remain strong, he tells Helen Massey-Beresford.
Q How have your feelings about the Sagem/Snecma merger changed since the last Paris Air Show in 2005?
At the last Paris air show, we were Safran for the first time, just after the merger. At this time, we were very pleased and confident about the future. Later on we ran into some significant difficulties, mostly outside aerospace and defence – telecoms had some very significant problems. We have faced these difficulties and taken measures to improve our position. We have never pretended that the idea of the merger was to put together engines and mobile phones. In a big company you always have very different technologies.
What we have said is that for our aerospace equipment activities it could be of great interest for the all-electrical aircraft of the future to be able to develop products with electronic and mechanical know-how. The electronic brakes for the 787 are just the beginning. The idea is to be prepared for the next generation. I am still confident that in the future we will have to develop all-electrical equipment.
The initial idea has not disappeared. I’m sure that as soon as we have brought some solutions to the telecom problems everyone will better understand what we are doing. For aerospace activities the last two years have been very rewarding – we’ve sold a lot of engines and equipment.
All companies in the Safran group are under strong pressure to increase capacity to follow the increased production rates at Airbus and Boeing. These are difficult times for a good reason – the increase of our order book. Telecoms are less than 10% of activities but they are like a red flag. There is life in Safran outside mobile phones.
Q How will your successor at Safran prepare for the future single aisle aircraft replacement?
My successor will have to be cautious to find with our partner GE the best solution for the engine. We have a definite goal to stay as successful in the future as we are today with the current generation of engines. We will make use of all the resources of Safran and GE together to understand what the requirements are. We are working with Airbus, Boeing and very significant airlines to understand what the expectations are – less fuel, noise, maintenance costs and so on. For the next aircraft we will have to be prepared to supply more complex equipment packages. We are prepared to do so.
Q How seriously is the weak US dollar affecting Safran?
It is no worse than for others. Three years ago I launched a plan to have a good economy by 2008 if the dollar was at a level of 1.20 against the euro. The bad news is that the dollar is at 1.35 so for 2008 it’s a miss – it will not be at 1.20; it will be worse. But there is also good news. With our hedged dollars we are able to run 2007 with this 1.20 exchange rate and our action plan to be ready by 2008 is one year in advance. We will be able to deliver the results expected for 2007.
In the meantime we have noticed that the dollar could get weaker. We are preparing other plans to cope with that. It is a permanent constraint for European players that we have to take care of the dollar. We will be able to deliver in 2008 thanks to a combination of increased productivity, buying more items from Dollar sources – natural hedging.
Q Will you consider buying businesses in the USA to increase your natural hedging?
Dollar sourcing does not mean you have to buy the company. During the last year the labour force has been steady in France, and outside employment has increased by 20%. We are developing ourselves in low cost countries and dollar zones.
Q Do you expect the French state to sell its stake in Safran in the near future? What impact would that have on the business?
It is a fact that the French state still owns a stake but we have other big shareholders. If I had to guess, in the long-term the French state will not stay at this level. It is obvious they don’t need to run an industrial company. I don’t see a specific need for the French state to stay at the specific level of 30%.
However, there is no example of the French state preventing us from being an industrial company. Snecma and later Safran have been quite successful – the fact that the French government is a shareholder has not prevented us from selling us to USAF, Airbus, Boeing, or being a partner with R-R, and GE.
Q How do you see your involvement in the Russian market progressing as the Superjet nears its first flight?
When we decided to invest company money in this programme it was based on the confidence that Russian industry would consolidate and still be a player for aircraft. Everybody is convinced that Sukhoi has good engineers and everybody knows the aircraft will fly. It was a bet, but based on the forecast that it would be able to design a successful aircraft. I am convinced that this aircraft will be a success.We were very happy to be chosen.
It remains to be seen if they will launch another aircraft. It may be the next step. For sure being a partner on the Superjet is a plus but I am not a dreamer. If in a few years from now they launch another aircraft there will be a competition – we will have competitors. We are ready to compete.
Q What specific hopes do you have for the Chinese market?
It is a very significant market. For us it is a reality – not tomorrow, it is today. We already have very significant commercial aircraft orders there. Our sales are nicely developing through Airbus and Boeing. But like a lot of others, we are waiting for the sky opening up to helicopters. The China sky is still limited to military helicopters. If the government decides to open the sky to helicopters it could be a significant opportunity.
Source: Flight Daily News
