A recent report by Bernstein Research takes an in-depth look at Safran, the French company that is the parent of Snecma, a joint venture partner with GE to form CFM International.
CFM, of course, is the sole-source engine provider on the Boeing 737 and has about half the market share on the Airbus A320 family.
In the January 17 note, Bernstein looks at the after-market engine business of Safran, which is dominated by the CFM56. There are nearly 17,000 CFM 56 engines in service today, mostly what Bernstein calls the second generation.
Bernstein’s report illustrates what we have occasionally written: the importance of after-market parts sales and MRO (maintenance, repair and overhaul) is to the engine market.
We’ve noted previously that the after-market is more important than the sale price of the engine where there is competition for a power plant.
As we’ve previously noted, it is not unknown for engine makers to deeply discount engine prices even more than the airframers discount their airplanes. In the lawsuit between Pratt & Whitney and Rolls-Royce over patent claims for the engines powering the Airbus A380, court documents revealed discounts as steep at 80% or more.
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