Safran: CFM56 & LEAP MRO | In Practise

Safran: CFM56 & LEAP MRO

Former Sales and MRO Director at Safran

Why is this interview interesting?

  • MRO sales process
  • How Safran is approaching MRO for LEAP vs CFM56
  • Material and Labour cost split per shop visit
  • CFM56 vs LEAP supplier strategy
  • Shop visit outlook and challenges

Executive Bio

Geert van Damme

Former Sales and MRO Director at Safran

Geert has over 27 years of experience in the aerospace industry, of which 18 years were at Safran. He is the Former MRO Sales and Support Director at Safran where he was responsible for CFM56 MRO activities for SNECMA. He also spent 3 years as Sales Director for CFM International covering the Middle East region where he was responsible for selling both LEAP and CFM56 engines.Read more

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Interview Transcript

Disclaimer: This interview is for informational purposes only and should not be relied upon as a basis for investment decisions. In Practise is an independent publisher and all opinions expressed by guests are solely their own opinions and do not reflect the opinion of In Practise.

Geert, to start, could you provide a short introduction to your background and role at Safran?

Since my education, I’ve been in aviation for 27 years now, of which 18 years were at Safran. During that time, I had several management positions from program management and sales to business development, so I have been in varied fields yet always related to the pure engine business on the MRO side.

When you first joined Safran, how were they approaching building out the CFM56 MRO network in the early 2000s?

At that time, they had already their own MRO facilities. If they are producing new engines, they need to have the MRO site next to it, to support the customers. At that point, the prime facility was in Paris but quickly they created some other facilities all over the world. In total today, Safran has five prime MRO sites in Mexico, Morocco, Belgium, Paris and China. Out of those five, two of them are joint ventures; Morocco with Royal Air Maroc and China with Air China. Only three are 100% owned by Safran.

How do you see the differences in the way they’re building out the LEAP MRO network versus those early CFM facilities?

There is a clear difference between the CFM approach and the LEAP approach. In the past, Safran did have a joint venture with GE to create a new engine CFM and it’s still the same way with LEAP; it’s a 50-50 joint venture. On the services and MRO side in the beginning, Safran was competing against GE for the MRO services side, so we had two different sales team competing with each other on sales on CFM56.

Around 2008, they came with the idea of creating CFM Services, which meant a joint approach instead of competing with each other. The CFM side still campaigned on Safran Services and the others on CFM Services. In the LEAP now, you only have CFM Services; you don’t have that competition with GE and Safran anymore.

Can third party and independents also compete for LEAP?

Yes, they can. Safran or CFM have been very open on this aspect in the sense that they are giving licenses to other MRO to start key LEAP business or the CFM business. It’s a little bit more restricted than on the CFM side, in order to keep out the independents that are doing PMA and things like that, but still they are providing licenses to big MROs like SRT, MTU, LHT, GATES. All those shops are going into the LEAP business and it’s no problem.

We know that other engine OEMs sometimes refuse to give licenses to MROs and you are the single source and unique provider of that engine module. This is not the philosophy of CFM. For CFM, new engine sales have been so successful that Safran and GE quickly understood that they cannot only do the MRO side. They have to share it, otherwise they will never cope with the shop visit demand.

The competition also reduces the unit cost of repair or maintenance for the airline as well, which is good for the customer.

Yes. It’s healthy for the airline to have some competition somewhere. Some airlines like the OEM shop, some others don’t but it’s a choice of the airline to select his own MRO site.

You mentioned the LEAP CFM services contracts are more restrictive. How are they more restrictive than the old CFM56 terms and conditions?

If you’re looking at CFM56, still today you have 47 engine MROs doing the CFM56 from OEM airline shops. Everybody can start without any problem. On the LEAP side, you need to have a specific license otherwise you have no access to details, no access to all engine data. They would like to better control the market to make sure that everybody is working on an OEM level, to try to avoid PMA providers or DER getting introduced.

So it’s really to protect the IP of the engine?

Yes, exactly but you also have to understand that it’s not only the OEM asking this. Sometimes it is also the lessors because, as you know, most of the airline fleets are getting leased more and more and the lessors would like to keep their assets at a higher value. They don’t want to get it polluted with some PMAs because then their asset value is getting impacted. That’s why there’s already high pressure from the lessors to put it on an OEM level.

Do the PMA parts reduce the asset value even though they’ve been qualified?

It’s a good question. Some of them think it’s purely protective from the OEM side to get more margin. When CFM sells a new engine, most of those engines are getting sold with a loss and they need to get their revenue back during the lifetime of the engine. Material sales is the prime aspect to get back margin. If they are not able to get that money back through new engine materials and somebody else is selling a PMA material, then it could impact the business plan of the OEM.

On the other hand, if an airline sends an engine to a shop with an installed PMA part, then the OEM says we don’t know what the influence will be of those PMA parts into the engine and what the behavior of the engine will be with this new material, so all the aspects of guarantee will be gone. CFM will not recognize this engine anymore as a CFM engine.

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Safran: CFM56 & LEAP MRO

August 8, 2021

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