Safran hikes forecasts after strong quarter for jet engine services

By Tim Hepher

PARIS (Reuters) -French aerospace group Safran raised full-year forecasts on Friday as it reported higher-than-expected third-quarter revenues, led by its core jet engine division.

The company, which co-produces LEAP jet engines with GE Aerospace through their CFM venture, said it had achieved a "strong catch-up" on delayed deliveries in the quarter, shipping more than in any previous quarter.

Engine makers have seen strong demand for spares and parts as airlines fly older planes for longer, due in part to congestion at maintenance centres and delayed jet deliveries from Airbus and Boeing.

The engine industry is seeing a tug of war between aircraft factories and airlines who need spares to relieve shortages.

CEO Olivier Andries said demand for aftermarket services and parts for civil jet engines remains strong.

Safran said its third-quarter revenue rose 18.3% to 7.85 billion euros ($9.15 billion). Propulsion revenues grew 25.6%, with the aftermarket, or services, up 21.1%.

Analysts were on average expecting quarterly revenues of 7.59 billion euros, according to a company-compiled consensus.

Safran said it was upgrading its revenue growth forecast for the full year to between 11% and 13% from a previous forecast of "low-teens." A French version of its earnings release clarified that the forecast had previously stood at 10% to 12%.

It also raised the forecast for operating income to 5.1 billion to 5.2 billion euros from a previous range of 5.0 billion to 5.1 billion and upgraded its free cash flow forecast to a range of 3.5 billion to 3.7 billion euros from 3.4 billion to 3.6 billion.

All targets now include the impact of tariffs.

'CATCH-UP EFFECT'

Safran followed GE Aerospace in lifting 2025 growth forecasts for LEAP deliveries to more than 20% from a range of 15% to 20%.

Andries said LEAP engine shipments in the fourth quarter would be close to levels seen in the third quarter, when CFM shipped 511 engines, up 40% from the same period last year.

Asked whether LEAP shipments to Airbus would drop again in the first quarter, as they did earlier this year following a race to complete jetliners at the end of 2024, Andries said CFM was ready to adjust allocations as needed.

"But we are not talking about significant amounts, a few engines, and clearly when we do that there is a catch-up effect," he told reporters.

Andries said CFM was discussing future needs with Airbus, but did not say whether CFM has committed to the planemaker's plans to raise narrow-body output to 75 jets a month in 2027. He noted, however, that the Airbus target did not apply to full-year 2027.

($1 = 0.8575 euros)

(Reporting by Tim Hepher; Editing by Jamie Freed and Jane Merriman)