part i - cfm - safran...footprint vs. cfm56 sfc (& co 2) nox reliability 50% l o w e r vs. caep...

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0 / CMD’11 / DECEMBER 13, 2011 /

Part I - CFM


1 / CMD’11 / DECEMBER 13, 2011 /Q3 REVENUE 2011 / OCTOBER 21, 2011 /

A successful CFMP.Fabre - Chairman & CEO Snecma

/ December 13, 2011 /

2 /


CMD’11 / DECEMBER 13, 2011 /

What CFM is …

èWorld’s most successful aviation joint venture… 34 aircraft applications … ~22,700 engines delivered …… 8,415 engines in backlog (including 2,760 LEAP) …

èWorld’s largest commercial aircraft engine manufacturer

… powering 55% of all aircraft ordered ’96 -‘10

3 /


CMD’11 / DECEMBER 13, 2011 /

The principles of CFM

è A well-defined field of applications§ Engines in the 18,000- to 50,000-pound thrust range

è A 50/50 joint company

è A lean organization

è Revenue sharing, rather than profit sharing§ Revenue from sales of engines and spares is split 50/50§ Profit is a function of each parent company’s own efficiency

èWork is split 50/50 – with well-defined responsibilities - no overlap§ Engine design, development, and production by module and function§ Customer interface is shared on a geographic basis

è All work is performed by dedicated CFM people from Snecma and

GE organizations

4 /


CMD’11 / DECEMBER 13, 2011 /

A true 50/50 Joint Venture

Engine sales, design, development, production & support, and services since 2008

5 /


CMD’11 / DECEMBER 13, 2011 /

CFM strengths

è Snecma and GE§ Backed by the strength of two world leaders

è Simple organization, customer focused

è Responding to customer requirements

è Value-driven technology§ The right products at the right time

èWorld-class customer & product support

6 /


CMD’11 / DECEMBER 13, 2011 /

CFM by the numbers (through December 2011)

è $22 billion in 2011 orders … 2,193 total engines to date§ Commercial, military, and spare engines; at list price§ vs. 1,585 total orders in 2010§ 31,465 total orders & commitments; ~22,700 engine delivered

è Strong customer base

è ~500 customers / operators

è ~9,500 CFM56-powered aircraft in service (a CFM powered-aircraft lands every 2s)

7 /


CMD’11 / DECEMBER 13, 2011 /

0

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2 000

2 400

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'01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12E

'13E

'14E

OrdersProduction

CFM outlookAnnual engine orders & Production rates

Through10/31/11

Planned Production

2011 another record year for orders … as production continues to increase

8 /


CMD’11 / DECEMBER 13, 2011 /

~2016+CFM technology evolution1982

A history of innovation… Driving the industry

CFM56-7B

CFM56-5B/P

CFM56-3

CFM56-5C

CFM56-7B/3

LEAP

CFM56-2

CFM56-5A

Intro FADEC & 3D Aero• 1% better fuel burn• Repair technology• Reliability/durability upgrades

Tech Insertion• ~1% better fuel burn• 2nd Gen 3-D aero• Combustor• Lower maint cost• Lower emissions

CFM56-7BE

CFM56-7BE• 1% better fuel burn• Lower maint cost

CFM56-5B/3

LEAP§ 15% lower fuel

consumption§ 50% lower NOx § 10-15 dB lower noise§ CFM56 reliability

9 /


CMD’11 / DECEMBER 13, 2011 /

Together for the long term…

èGE and Snecma have renewed the CFM 50/50 partnership agreement to the year 2040

è All engines in the 18,000 to 50,000-pound thrust class will be within the CFM product line

è 2008 agreement provides for integrated services (MRO) offerings on future engines above and beyond the traditional spare parts

CFM, CFM56, LEAP, LEAP56, and the CFM logo are trademarks of CFM International, a 50/50 joint company between Snecma and General Electric Company

LEAP will maintain CFM leadership for next-generation aircraft

10 /


CMD’11 / DECEMBER 13, 2011 /Q3 REVENUE 2011 / OCTOBER 21, 2011 /

A giant LEAP into the futureC.Goubet - Executive Vice President CFM

/ December 13, 2011 /

11 /


CMD’11 / DECEMBER 13, 2011 /

Powering all leading narrow body aircraft

Engine Manuf.

A320 A320neo

B737 B737 MAX

C919

CFM

è CFM on all major narrow body aircraft

è Performance, maintainability and reliability advantages got it there

è Winning on all aircraft, in all regions… with industry leading airlines

CFM, the airframers & operators choice

12 /


CMD’11 / DECEMBER 13, 2011 /

ABC… 3 letters for a complete family

LEAP-1A LEAP-1B LEAP-1C

A320neo2016

737 MAX2017

C9192016

LEAP, engine of reference for the market, certified by 2015

[LEAP: Leading Edge Aviation Propulsion]

Dual source Single source Single western source

13 /


CMD’11 / DECEMBER 13, 2011 /

The value for Safran

è LEAP potential market estimate§ Up to 2,000 aircraft for C919§ More than 4,000 aircraft for

A320neo§ More than 4,000 aircraft for

B737MAX

§ Current backlog of 1,380 aircraft ($30 billion among which $15 billion for Safran)

è Total value for Safran § $170 billion at list price for CFM

among which $85 billion for Safran

Source: Safran

The number of short-medium range aircraft will double in the next

20 years

14 /


CMD’11 / DECEMBER 13, 2011 /

The choice of the new performance standard

è Committed to deliver the best engine § Performance, Retention§ Emissions§ Reliability§ Maintenance cost

LEAP

Maint. costNoise

-75%noise

footprint vs. CFM56

SFC (& CO2) NOx Reliability

50%l o w e r

vs. CAEP 6 norm

15%b e t t e rvs. CFM56

Best in industry … Continuing CFM56 tradition

Less fuel, fewer emissions, exceeding new environmental regulations

SFC: Specific Fuel Consumption

15 /


CMD’11 / DECEMBER 13, 2011 /

Fuel efficiency

$8Mvs. current engine

LEAP, the added value for the customer

500+

$1.5Mvs. current engine

NoiseCFM experience

& executionCO2

$1.2Mvs. current engine

m i l I i o nf l i g h t h o u r s

• 21 EIS … on time, on spec• Continuing investment• Customer support network• Maint. commonality• Existing parts logistics• Training commonality

Reliability

Nocompromise

Assumptions:• Nominal environment; 3200 hrs/yr; 1.7hr FL; 750nm; $3/gal; 0% fuel

escalation; EU noise charges on 20% of flights, 15yr NPV 8%Average savings over an aircraft life cycle

(vs. CFM56-5B and CFM56-7B)

And, as the engine of reference, the guarantee of the best residual market value

16 /


CMD’11 / DECEMBER 13, 2011 /

2009 2010 2011 2012 2013 2014

Excellence in execution

Fan

LPT

Core

• First run• Performance• Aero• 2.5 lb bird• 4.0 lb bird

• Crosswind• Acoustics

• Endurance• Blade out• 6.0 lb bird

• LPT rig

Core 1(Ph. 1)

Core 1(Ph. 2) Core 2 Core 3

2015

• Full composite (blades & case)

• Dual spool rig

Architecture freeze Tollgate passedExcellent results

Module efficiency demonstrated, technology matured

17 /


CMD’11 / DECEMBER 13, 2011 /

Composite fan blades & case… certifiable

è Full-scale engine test

è Extensive tests completed§ Performance§ Operability / crosswind§ Aeromechanics§ Acoustics§ 2,000 endurance cycles§ Full composite endurance§ Full composite Blade Out

18 /


CMD’11 / DECEMBER 13, 2011 /

Core engine program continuing on-schedule

è e-Core 1 completed testing 2010§ Very successful test program§ Met, or exceeded, all test objectives

è e-Core 2 is on test§ Planning over 200 test hours

è e-Core 3 planned for 4Q 2012§ Final tune-up prior to start of

certification program

19 /


CMD’11 / DECEMBER 13, 2011 /

Full LEAP Low Pressure Turbine Rig test

è Goal: to validate LEAP technology and innovations§ 3D advanced optimized airfoils§ 3D shape platforms§ Blade and vane alignment§ Reduced trailing edge thickness

è Results § Very high efficiency level confirmed§ Test outcome matching simulation

expectations

Maturation program on schedule for reliability at EIS

20 /


CMD’11 / DECEMBER 13, 2011 /

In-service products

continuousImprovement

Development ofnew products

CFM56Gen1

-3

-5A

CFM56Gen2

(8% improvement over 12 years)

-7B

-5B

CFM’s legacy - Look beyond

LEAP

(2015)

-1A

-1B

-1C

Pursuing the material revolution

Several % of fuel burn during lifetime

LEAP 2 (2020)

3rd gen.

21 /


CMD’11 / DECEMBER 13, 2011 /

A commitment to deliver

CFM

The best engine solution for narrowbodies

Today and tomorrow

Tradition of outstanding performance and reliability

22 /



A powerful OEM market G.Meheust - Executive Vice President Sales & Marketing Snecma

/ December 13, 2011 /

23 /


CMD’11 / DECEMBER 13, 2011 /

Growing transport demand

èWorld passenger regular network traffic (RPK) to grow ahead of GDP

Source: Safran

Regular Worldwide Passenger Network

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1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030

RPK

or A

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illio

ns)

2011 Outlook: Traffic (RPK)

24 /


CMD’11 / DECEMBER 13, 2011 /

2011: record year in engine orders

930

430

1,283

2,121

2,704

2,221

795

1,584

1,400

20,535

22,715

25,17925,929

27,422

31,465

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4500

2006 2007 2008 2009 2010 Oct. 2011

Leap Comac *Leap 737 Max *Leap Neo *CFM56 ordered enginesCFM56 Cumulative

Years

CFM engines (CFM56 + LEAP) TOTAL backlog

CFM56 and LEAP

8,415 engines

* After Dubai Air showincluding commitments

Backlog: more than 6 years of production

25 /


CMD’11 / DECEMBER 13, 2011 /

Market share: single aisle aircraft on current CFM56

2011aircraft firm orders

V250013%

CFM5687%

Cumulativeaircraft firm orders

IAE19%

PW3%

RR5%

CFM73%

CFM56 - Airbus 182 aircraft

CFM56 - Boeing 483 aircraftCFM56 - Airbus 3,762 aircraft

CFM56 - Boeing 8,140 aircraft

As of November 2011

Growing our market share

26 /


CMD’11 / DECEMBER 13, 2011 /

Market share: aircraft orders on future applications

LEAP§ A320neo 465 a/c§ B737MAX 700 a/c§ C919 215 a/c

---------1,380 aircraft

PW1000G§ A320neo 370 a/c§ Cseries 143 a/c§ MC21 128 a/c

----------641 aircraft

As of December 2011(>100pax)

LEAP, the customers preferred choice (again)

Orders and Commitments> 100 Pax

PW 1000 Series32%CFM LEAP

68%

27 /


CMD’11 / DECEMBER 13, 2011 /

The customers choice

A320neo B737MAX C919Virgin America 30SAS 30GECAS 60ILFC 40CIT 15Republic 80Air Asia 200Garuda 10

Total 465 aircraft

American Airlines 100Lion Air 201ACG 35Undisclosed 364

Total 700 aircraft

1,380 aircraft; 2,760 LEAP engines; $30 billion at list price

Air China 20China Southern 20China Eastern 20Hainan 20CDB 10GECAS 10ICBC 45Sichuan 20Bank of Com 30China a/c Leasing 20

Total 215 aircraft

(As of Dec. 2011)

28 /


CMD’11 / DECEMBER 13, 2011 /

Worldwide engine backlog (CFM56 + LEAP)

Europe

Africa / Middle East

Asia / Pacific Americas 19%

7%

33%41%

Total backlog CFM56 & LEAP: 8,415 engines

Fleet renewalMarket growth

29 /


CMD’11 / DECEMBER 13, 2011 /

Source: Ascend

CFM global footprint

U.S.

1,301

6,176

Total aircraft units(50 PAX and above)

Europe

1,379

4,652China

509

Latin America

510

1,113

Middle East881860

India282

346

CFM powered

1,543

CFM powers 41% of aircraft fleet in service; 45% on aircraft on order

30 /


CMD’11 / DECEMBER 13, 2011 /

5254

7371

4000

4500

5000

5500

6000

6500

7000

7500

8000

<2007 2007 2008 2009 2010 2011

CFM

Eng

ine

unde

r RPF

H co

ntra

ct

Huge success of CFM long term services offerings

2008 GE/Snecma agreement opens up growth in service offerings

CFM56 & LEAP under Rate Per Flight Hour (RPFH) contract

31 /


CMD’11 / DECEMBER 13, 2011 /

LEAP: key factors for success

è Best performing narrowbody engine§ Best fuel burn, lowest deterioration (2.4% better vs. PW1000G)§ Best maintenance costs (20% longer time on wing vs. PW1000G)§ Best revenue generating engine (30% fewer delays, faster turns)

è Lowest risk in execution§ 21 CFM service entries on-time on-spec / ~22,700 engines delivered§ 550 millions hours of CFM operating experience with 99.98% reliability § Incorporating GE90/GEnx/CFM learning and demonstrated technologies

è Best technology at Entry-in-Service and for growth§ Simple efficient architecture (fewer frames, bearings, systems)§ Designed for revenue generation (operability, maintainability, reliability) § Unmatched innovations (i.e. maintenance-free fan module, efficient 22:1 Pressure Ratio,

High Pressure Compressor, …) and continuous technology investment (aero, material, cooling improvement pipeline)

LEAP, engine of reference for the market

32 /



Understanding the aftermarketM.Brioude - Vice President, MRO Operations Snecma

/ December 13, 2011 /

33 /


CMD’11 / DECEMBER 13, 2011 /

Overview of aircraft engine services

è Until deregulation, engine services were limited to the sale of spare parts§ Airlines were maintaining their equipment for themselves and/or 3rd parties§ MRO was an obligation rather than a business (warranty, …)

è Competitive pressure on the whole system resulting from deregulation has reshuffled the cards§ Airlines focused on their own core business: selling seat-miles, divesting MRO facilities§ OEMs took over most of the MRO business, seeing an opportunity to compensate for lower

margin on OEM sales

è Today, a good OEM service policy is a win-win combination of spare part sales and maintenance/repair services allowing:§ Airlines to enjoy maintenance costs that are competitive, predictable and manageable§ OEMs to extract value from the sale of the product through its service lifeè Visibility for both parties: airlines and engine manufacturers

34 /


CMD’11 / DECEMBER 13, 2011 /

Overview of CFM56 aftermarket

CFM parent companies shops(50% market share)

Airlines shops(30%)

Independent shops(20%)

Full fledged MRO servicesSpare parts

Spare partsRepair services

Spare partsRepair services

CFM 96% of spare parts market share

CFM 100% market share

Whatever the customer choice, Snecma/GE can provide a full range of MRO services or spare parts only

=

Services providers What CFM provides Value for CFM

35 /


CMD’11 / DECEMBER 13, 2011 /

CFM56 engine maintenance contracts

è CFM offers to all CFM56 operators/owners and to other CFM MRO services providers a full range of services

èMaintenance contracts and Material solutions (i.e. sophisticated spare parts supply) designed to meet customer needs

è Scope of the contracts may includes Engine Line Operation Services, engine overhaul, spare parts/used parts supply and full engine parts repair§ Full engine fleet services « $ per hour » (ESPH) to operators è manageability & predictability

§ Material Services Agreement (MSA) to other CFM MRO providers

From “One time shop stop” to long term CFM global solution

36 /


CMD’11 / DECEMBER 13, 2011 /

Aircraft and engine maintenance schedule

è Aircraft maintenance: less time on the ground is more time in revenue service§ Longer interval between routine checks

è Engine maintenance, «On-condition»maintenance policy§ “On Wing” engine management

ú Engine key parameters real-time monitoring

§ “Off wing” engine maintenanceú Performance restoration or LLPs replacementú Introduction configuration Kit-upgrade: reliability

and performance improvements

Engines under an independent maintenance schedule vs. aircraft.“On condition” maintenance provides customer operations benefit

37 /


CMD’11 / DECEMBER 13, 2011 /

CFM parts, the only reliable partner for the maintenance

è All CFM parts are designed, developed, tested, repaired and substantiated as part of an integrated system for reliability and safety

§ 3,000+ individual parts, 40 sub-systems & Sub-assemblies, 8 main engine modules

è Alternate material parts and repair options§ Systematics & Standard, tubes and brackets:

low technology parts

§ Flowpath parts on 1st gen. CFM 2D aero design and few 3D aero

§ 1st gen. CFM56-3 LLP’s but nothing available for 2nd gen. CFM56-5B/7B on the market place

è Few options…but need different suppliers …with limited market recognition

An engine is a totally integrated aerodynamic, structural, heat transfer and acoustic system … not one piece at a time !!!!

CFM global solution PMA providers

38 /


CMD’11 / DECEMBER 13, 2011 /

CFM global solution: TRUEngine™ label

TRUEngine enhances value and increases marketability

è TRUEngine program for identifying engines that have been maintained in accordance with CFM-issued recommendations

è Qualification in TRUEngine program based on maintenance records from its most recent shop visit§ A free program… no cost to qualify or receive benefits

è TRUEngine designation facilitates CFM’s ability to provide optimal customer support

39 /


CMD’11 / DECEMBER 13, 2011 /

39

2009

1,930

4,490

2008

6,176

2010-2011

6,100+qualified engines

65customers worldwideand growing …

30%+ Lessorowned

Qualified Engines

2011 additions

CFM TRUEngine™ program status

TRUEngine surpasses 30% of CFM56 fleet

40 /


CMD’11 / DECEMBER 13, 2011 /

A global MRO network

Belgium

MoroccoChina

Mexico

Brazil

Malaysia

Wales

Safran shop visit centres

GE shop visit centresUnited States

Customer proximity for a better service

France

41 /


CMD’11 / DECEMBER 13, 2011 /

Timing of a shop visit (2nd generation CFM56-5B/7B)

EIS 1st SV

7-9 years

2nd SV 3rd SV

Future intervals depend on LLP’s constraints& performance restoration during the previous SV

Economic lifetime of an engine is about 25 years

Timing and content are not accurately predictable, backlog visibility is limited

è Engine workscope is first proposed by the shop and then subject to customer approval§ Scope defined based on engine revenue data and configuration§ In compliance with airworthiness requirements FAA, EASA, CAAC…

è A shop visit lasts 7 to 9 weeks§ Engines under maintenance are replaced by spare/leased engines for the aircraft to continue its operation

in the mean time§ Spare parts lead time from 2 to 3 weeks

42 /


CMD’11 / DECEMBER 13, 2011 /

Shop visit cost (2nd generation CFM56-5B/7B)

è Engine 1st shop visit cost range ($1M to $4M+) is due to:§ Targeted level of performance restoration and used/new spare parts & repairs pooling§ Engine thrust rating/derate in operation, flight leg, pay-load § Condition of operation: temperature, altitude, sand dust or pollution§ Proximity to LLP’s maturity / “stub life” policy

è First shop visit cost mainly driven by material content§ 65% Material cost (w/o LLP’s), 25% Repair cost, 10% Routine and Engine Test

è Full LLP’s change by a new set at a cost of $2.3M provides full engine life recovery§ LLP’s mandatory removal: 20 to 30kcycles

è First « on wing » average life demonstrated on 2nd gen. engines models may reach 25khours/15kcycles: 7 to 9 years of operations§ More than x2 what was demonstrated on 1st gen. engine models

Cost is driven by timing, which is a function of customer priorities, including cash usage

43 /


CMD’11 / DECEMBER 13, 2011 /

Young engine fleet to drive higher aftermarket needs

CFM56 engine fleet: age distribution (as of Feb. 2011)

39% of the CFM56 engine fleet have less than 8 years of operations68% of the CFM56 engine fleet have less than 15 years of operations

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44 /


CMD’11 / DECEMBER 13, 2011 /

Fleet distribution to drive higher number of shop visits

8,000 2nd gen. engines in operation have not yet had their 1st SV2nd gen. engines shop visits CAGR expected at 11% for the 4 coming years

CFM56 fleet shop visits distribution (as of Feb. 2011)

0100020003000400050006000700080009000

WithoutSV

1 SV 2 SVs 3 SVs 4 Svs 5 SVs andmore

Nb

of e

gnin

es1st generation

2nd generation

45 /


CMD’11 / DECEMBER 13, 2011 /

Short term volatility, short/medium term inevitable catch-up

Global spare parts revenue (in $ - 100 base in 2000)CFM engines

0

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2 0 0 0 0

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82 84 86 88 90 92 94 96 98 00 02 04 06 08 1012 E

14 E

16 E18 E

20 E

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2 0 0

3 0 0

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6 0 0

2010 : 20,000 engines / 500 million flight hours

2020 : 30,000 engines / 1,000 million flight hours

CFM56 spare parts revenue potentially to double by 2020

46 /


CMD’11 / DECEMBER 13, 2011 /

Q&A sessionCFM

47 /


CMD’11 / DECEMBER 13, 2011 /

part i - cfm - safran...footprint vs. cfm56 sfc (& co 2) nox reliability 50% l o w e r vs. caep...

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