French group Safran's revenue drop steadies in third quarter, reaffirms targets

PARIS (Reuters) - Sales at Safran SAF.PA fell 44.5% in the third quarter to 3.382 billion euros ($4 billion) from a year ago but steadied compared to the previous quarter, prompting the French aerospace group to reaffirm full-year forecasts despite new coronavirus lockdowns.

FILE PHOTO: The Safran company logo is pictured at the company's logistic area in Colomiers near Toulouse, France, March 20, 2019. REUTERS/Regis Duvignau

Safran, which co-produces engines for the most-sold Airbus AIR.PA and Boeing BA.N jets with General Electric GE.N, said it was intensively cutting costs as traffic recovery remained slow.

Third-quarter revenue fell by an underlying 42%, led lower by the main aerospace division as airlines flew fewer hours, meaning less demand for parts and services compared with a year earlier.

Demand for a slew of equipment from landing gears to brakes and oxygen or fuel systems also fell, driving sales at the Aircraft Equipment division down by an underlying 33.6%.

With business travellers working on Zoom or shunning face-to-face meetings, Safran’s recently acquired interiors activity was hit by airlines postponing installation of new premium seats or delaying other retrofits. Sales there fell by more than half.

Closely watched civil aftermarket revenue fell 56.2% in dollar terms in the third quarter after a 66.0% slump in the second. Safran cited lower parts sales for CFM56 engines that power older Boeing and Airbus medium-haul jets.

In a further sign that airlines are turning mainly to new-generation jets that consume less fuel as they restore capacity, Safran said the number of weekly cycles or flight segments flown by the CFM56 engines was down 48% as of Oct 25, compared to a year earlier, while usage of newer LEAP engines was down 15%.

Both sets of figures improved slightly compared to the second quarter, mainly in China.

Safran said it was on track to meet or exceed cost-cutting targets brought about by the pandemic. It has shed 16% of its permanent workforce or 20%, including temporary staff, to bring the total to 81,200. Capital and operational spending also fell.

(This corrects last paragraph to show 20% cut includes temporary staff)

Reporting by Tim Hepher; Editing by Sudip Kar-Gupta