Engine manufacturer Safran has told investors that the focus of its lucrative aftermarket business will evolve from time-and-materials contracts for the CFM56 to rate-per-flight-hour deals for the LEAP engine.
This reflects the fact that more customers for new-generation narrowbodies are signing up to OEM maintenance deals upon choosing an engine, both with CFM and rival Pratt & Whitney.
Safran, which is one half of the CFM alliance, expects its aftermarket revenue from civil engine to grow at a compound annual rate of 15% between 2021-25.
It also predicts that spare parts demand for the CFM56 will return to 2019 levels around 2024, to then plateau from 2025 to 2028.
Aviation Week Network’s Fleet & MRO Forecast has CFM56 maintenance demand rising from $10.3 billion next year to a peak of $13.5 billion in 2025. It then predicts a steady decline to $9.7 billion by 2031.
Even so, by that point the CFM56 maintenance market will still be worth almost double that of the LEAP, for which Aviation Week predicts $5.5 billion of demand by 2031.
And while Safran expects to service LEAP demand with flight-hour deals, it is as yet unwilling to talk about their profitability. Instead, it is assuming zero margin on flight-hour engine maintenance contracts until 2026, “once sufficient experience has been acquired on the actual cost of LEAP shop visits.”
Nonetheless, the OEM knows it is in a strong position, claiming that the LEAP has 72% of all narrowbody engine orders and commitments. To satisfy this demand, CFM is planning to double LEAP production from 2021 to 2023.
Whether its ramp-up plans will extend to meeting Airbus’s long-term goal of 70+ narrowbody aircraft per month remain to be seen.
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