PARIS – On Wednesday, french jet engine maker Safran named U.S. contractor Howmet Aerospace (NYSE: HWM) as the supplier of parts at the center of industrial issues that led to a slowdown of engine production and curtailed deliveries of Airbus jets.
The comments by Safran CEO Olivier Andries cast an unusual spotlight on recent supply problems in aerospace but appeared intended to clear the air following weeks of speculation over the cause of an abrupt slowdown in LEAP engine deliveries.
Howmet could not immediately be reached for comment outside U.S. business hours.
Airbus last month reduced its delivery targets for 2024 and slowed its production ramp-up, after what it described as delays in deliveries of LEAP engines built by Safran and GE Aerospace venture CFM, as well as other components like landing gear.
Asked to explain the shortfall, Andries told reporters and analysts in separate calls that it resulted from a sharp drop in the production yield – or proportion of usable parts – for high-pressure turbine blades.
On a media call coinciding with the group’s half-yearly earnings, he named the supplier of the blades which are a key component of the inner core or hot section of the engine.
“The supplier’s yields dropped sharply and surprisingly; the supplier is Howmet,” Andries said, adding that the situation had partially recovered in recent weeks.
The tone of the remarks appeared to strike a contrast with comments a day earlier by Howmet CEO John Plant.
He told analysts that production of turbine blades for the engines’ hot section had increased significantly and added: “And therefore it’s unlikely that we are providing such constraints”.
Shares in Howmet Aerospace (NYSE: HWM) rose 13% on Tuesday after the Pennsylvania-based company lifted annual forecasts, driven by strong demand for engine products and fastening systems.
AIRBUS ‘BLIND-SIDED’
Safran and GE Aerospace (NYSE: GE) jointly own CFM International, the world’s largest jet engine maker by volume, whose LEAP engines power all Boeing 737s and about half of the competing Airbus A320 family.
Last month, Airbus cut aircraft delivery forecasts and slowed its production ramp-up after problems with supplies of LEAP engines and other components, such as landing gear.
On Tuesday, Airbus CEO Guillaume Faury said it had been “blind-sided” by the shortfall in deliveries of LEAP engines, which comes on top of a broader history of industrial problems affecting competing Pratt & Whitney engines.
Andries’ comments referred to the quality of parts rather than quantity. Experts say production yield is the proportion of parts that meet rigorous inspection thresholds in aerospace.
The high-pressure turbine blades are a critical part of the hot inner section of the LEAP engine for which GE Aerospace is responsible under the share of work in the French-U.S. CFM engine partnership, which turns 50 this year.
Last week GE Aerospace (NYSE: GE) said it had made progress with several suppliers but that new engine output, which fell 20% in the second quarter from the previous quarter, had not recovered in May as hoped. It reiterated that the supply of materials was a key constraint.
GE could not immediately be reached for comment on Andries’ remarks concerning the production of LEAP high-pressure turbine blades, for which Howmet Aerospace (NYSE: HWM) is the sole supplier.
The shortfall in LEAP engine deliveries in the second quarter leaves CFM facing a sharp increase in output in the second half. Andries said CFM had reached an agreement in principle with Airbus over volumes to be supplied in 2025.
(Source: Reuters)
Mark Glenn is a financial journalist and breaking news reporter for ABBO News. Mark is known for his ability to deliver real-time news updates on market developments, mergers and acquisitions, corporate earnings reports, and regulatory changes, helping investors stay informed and make sound financial decisions.
