Safran Downgrades Annual Revenue Outlook Due to LEAP Engine Delivery Delays

Safran, a French jet engine manufacturer, has adjusted its financial forecasts due to supply chain bottlenecks affecting its LEAP engine production with GE Aerospace. Despite a 17.4% revenue increase to 19.686 billion euros in nine months, it reduced its 2024 revenue expectation to 27.1 billion euros from 27.4 billion, anticipating a 10% decline in LEAP deliveries.

Safran, the renowned French jet engine manufacturer, has revised its financial forecasts for 2024, attributing the adjustments to ongoing supply chain bottlenecks affecting the production of LEAP engines in collaboration with GE Aerospace [1]. Despite a remarkable 17.4% revenue increase to €19.686 billion in the nine months ended December 31, 2023 [1], the company anticipates a 10% decline in LEAP engine deliveries, leading to a reduction in the 2024 revenue expectation from €27.4 billion to €27.1 billion [1].

The adjustments to Safran's financial forecasts come amidst the ongoing recovery of the global aviation industry, which experienced a significant decline in air traffic due to the COVID-19 pandemic [2]. The company's strategic positioning on growing narrowbody markets had initially contributed to its robust revenue growth [1]. However, the recent supply chain disruptions have necessitated revisions to Safran's expectations for 2024.

Safran's Chief Executive Officer, Olivier Andriès, expressed confidence in the company's ability to continue its revenue and profit growth trend despite the challenges [1]. The company plans to ramp up deliveries further and increase services to meet customer demand [1].

The supply chain bottlenecks impacting LEAP engine production between Safran and GE Aerospace are not unique to the aerospace industry. The global economy has experienced numerous disruptions in various supply chains due to factors such as geopolitical tensions, labor shortages, and the ongoing COVID-19 pandemic [3]. These disruptions have forced companies across industries to adapt and find alternative solutions to mitigate their impacts.

References:
[1] Safran. (2024, February 15). Safran publishes its full-year 2023 results and 2024 outlook. Retrieved from https://www.safran-group.com/pressroom/safran-publishes-its-full-year-2023-results-2024-02-15
[2] International Air Transport Association. (2023). IATA announces global air traffic growth for 2022. Retrieved from https://www.iata.org/en/pressroom/pr/2023-01-26-01
[3] World Economic Forum. (2022, November 30). Supply chain disruptions: The new normal? Retrieved from https://www.weforum.org/agenda/2022/11/supply-chain-disruptions-the-new-normal/