Safran Sees Leap Aftermarket Emerging By Mid-Decade

Credit: Sean Broderick/AW&ST

Safran sees CFM aftermarket activity transitioning from primarily CFM56-driven work to services on its current-generation Leap engine family around mid-decade as the newest narrowbodies are prioritized in airline networks, a top executive said.

"We see Leap growth picking up from 2025, gradually relaying CFM56,” Francois Planaud, Safran Aircraft Engines VP material services, said during the company’s recent investor day. Safran and GE are 50/50 partners in CFM.

Annual CFM engine shop visits topped out at just above 2,000 before the downturn—almost all of them CFM56-5B and -7B variants that power some Airbus A320ceo-family aircraft and the entire Boeing 737 Next Generation fleets. These will remain prevalent for years to come, while the Leap will begin to make a noticeable contribution in the next few years.

Safran sees total annual CFM shop visits topping 2,000 again in 2024, with some help from the Leap family. CFM56-variant shop visits are expected to peak in the 2025-26 timeframe, at about 2,500 per year. By 2030, the CFM stable could be generating more than 4,000 shop visits annually, roughly split between Leaps and previous-generation models.

If there is upside, it will lift the CFM56 family and be driven by higher utilization and minimal retirements.

“We forecast a very solid -5B/-7B shop visit recovery profile," Planaud said. "As a potential tailwind, any additional traffic we believe will translate in more cycle and shop visits on CFM56 as the Leap fleet is already utilized at its maximum. This could represent a potential upside to our base scenario.”

Spare parts will follow a similar trajectory, with CFM56 sales peaking around 2025 and staying consistent for several years. Compared to pre-downturn projections, the revised scenario lowers the peak year’s total and moves it to the right slightly, while maintaining a longer period at the top end of the curve.

"We will return to the 2019 levels in 2024 and then have a high ongoing run rate over the 2025-2028 time period,” Planaud said. The CFM56 fleet includes about 23,000 engines across all industry segments. It is projected to be 19,000 engines in 2025. CFM has built about 5,000 Leaps, but some 20% of them sat idle on grounded and undelivered 737 MAXs from March 2019 through the end of 2020. Boeing’s backlog of 737 MAXs built from March 2019-December 2020 remains at about 290 aircraft, Aviation Week Fleet Discovery data show.

Leap production totaled 815 in 2020 and will be about the same in 2021. It is set to ramp up to about 2,000 engines/year in 2023 and remain around that level for at least several years.

Transitioning to the Leap will slowly shift CFM’s aftermarket business model from reliance spares sales and time-and-materials work to a focus on long-term agreements. The CFM56 aftermarket revenue profile is 85% spare parts and time-and-materials, compared to about 40% of the Leap.

Safran sees the Leap fleet reaching 60-70% long-term agreements by 2030.

While such agreements incentivize minimizing per-shop visit costs, they offer other revenue streams, Planaud said, citing engineering support and short-term leasing as examples.

“There is a variety of things we can have in a contract,” Planaud said. Long-term agreements "provide a base for revenue, which is larger than just the base of the spare part portion, if you will, of the aftermarket activity,” he added.

Sean Broderick

Senior Air Transport & Safety Editor Sean Broderick covers aviation safety, MRO, and the airline business from Aviation Week Network's Washington, D.C. office.