Safran is confident that its nacelle business, bolstered by primary-supplier positions on the Airbus A320neo and A330neo, is poised to deliver years of solid aftermarket returns, even as principal customer Airbus moves to in-source some of its nacelle work.
Airbus earlier this year unveiled plans to in-source work on nacelles for the Pratt & Whitney-powered A320neos, starting with assembly.
A job posting from June suggests the OEM has bigger plans; Airbus said it was looking for an engineer as part of its "nacelle in-sourcing" project.
"The objective is to redesign internally air inlet, fan cowls, thrust reverser unit, plug and exhaust and to become overall pylon, air inlet and nacelle integrator to enable new and more efficient architecture," the job posting explained.
While the move does not directly affect Safran, which supplies nacelles for the CFM Leap-powered A320neos and all A330neos, Safran CEO Philippe Petitcolin acknowledges that his company is focused on keeping the work it has.
"We are talking to one of our key customers who has already decided to come back into the nacelle business," he told analysts on a recent earnings call. "We hope we will be able to show our customer that we provide the necessary competitiveness he needs and remain the supplier of choice for this customer."
Nacelles are sold as part of engine packages, meaning they are bought not by the operator, but the aircraft OEM. While the original-equipment opportunity is notable, it's the aftermarket that ensures suppliers maximize their product-development investments. Last quarter, Safran executives pointed to a "high growth rate" of nacelle spare parts, which it attributes to the growing CFM-powered A320neo fleet.
Safran has extensive nacelle experience, but its role as an integrator is relatively new. It supplies A380 nacelles, but has been a second-tier supplier on many larger programs, such as to Goodrich on the A320neo, where Safran provides thrust reversers.
"We were, for some of the nacelle, a second-tier supplier to another equipment manufacturer. So our percentage of services was lower than what it should be," Petiticolin says. "With the new businesses we have been awarded by customers, such as the nacelle for the A330neo or the nacelle for the A320neo Leap, we are now a Tier 1 supplier, and we will enjoy everything related to this status in terms of services."
Nacelles generate about 20% of the revenue in Safran's Equipment business unit, which is second only to propulsion in total per-unit revenues. Through the first nine months, Safran Equipment generated €1.2 billion ($1.4 billion) in sales, or about 34% of the company's total revenue. Services revenue within the equipment unit was up 4.8% thanks to upticks in nacelle and carbon brake work, Safran says.