Jean-Paul Herteman, Chairman & Chief Executive Officer of Safran | © Eric Larraydieu / Interlinks-image
If you had to name only one, what was the business highlight of 2011 for Safran?
With more than 3,000 orders during the year, the new LEAP engine received a remarkably warm welcome! Chosen by Airbus, Boeing and Comac for the next generation of single aisle commercial jets, it is already on track to be a worthy successor to the best-selling CFM International CFM56. In 2011, the CFM joint venture between Safran and GE set an all-time record, with firm orders and commitments worth 52 billion dollars at list prices. These orders, which also provide solid foundations for tomorrow’s service business, a source of recurring income, will guarantee a smooth, controlled transition between our two generations of best-selling aircraft engines.
What doors does this open for Safran?
With recurring operating income up 35 % and buoyant cash flow to support our significantly increased investments, we largely confirmed our growth potential. Safran is investing in new technologies, modernizing our industrial facilities, expanding our presence in growth markets and consolidating our leadership on the next generation of single-aisle jets, the A320neo, 737 MAX and C919. At the same time, we are already gearing up for the breakthrough technologies needed on the next generation, which will come to market in about fifteen years.
What were the other business highlights in 2011?
Among our many successes last year, two are particularly significant for our future: in Brazil, we were selected by Embraer to provide the electrical distribution system and integrate this system on the new KC-390 transport, signaling a further step towards new business segments for more electric aircraft. In India, the national identity program Aadhaar passed the milestone of 100 million unique ID numbers assigned to residents of the country, and has reached an enrollment rate of nearly 1 million new persons per day!
Wouldn’t you say the year was also very rich in terms of external growth and partnerships?
Definitely! Safran successfully completed several strategic transactions that have bolstered our positions. The acquisition of SNPE Matériaux Energétiques (SME) will lead to the creation of Herakles, the world’s second largest manufacturer of solid rocket motors. We also added L-1 Identity Solutions, consolidating our world leadership in biometric solutions and making Safran one of the top three players in the security technology market, with 1.5 billion euros in sales and over 7,000 employees. In the defense sector, we signed an agreement with Thales, paving the way for a restructuring of the French optronics industry to ensure its long-term viability in a globalized market. We also formed a joint venture with Honeywell, a world leader in aircraft equipment, to develop electric green taxiing systems. We have formed a winning team that will offer a new technology, one that will improve airlines’ operational efficiency and ensure the sustainable development of air transport.
From the outside, we see an enterprise on the move, one that has reached a certain level of maturity. How would you evaluate the situation?
Last year saw the rollout of a new corporate governance for Safran, more aligned with today’s competitive environment. Another highlight was the entry of the Safran share in the French stock market index CAC 40, reflecting the market’s appreciation of our development potential. In recent years, Safran has successfully repositioned itself in three core businesses (aerospace, defense, security), managed the air transport crisis with calm confidence, successfully replaced the CFM56 and invested in the booming security market through several major acquisitions. I believe that we can look ahead to our long-term future with confidence.
Under current conditions, there are very few companies that enjoy such a strong position…
True, but to accelerate our growth even further, we must now amplify our research efforts and focus on innovation, meet the industrial challenge of delivering LEAP engines, and increase the share of service business in our total revenues to energize our business model. Meeting these goals will depend on attracting top talents. After hiring nearly 6,000 new employees in 2011, half in France, we will recruit just as many in 2012, including both men and women who love their jobs, and are motivated, responsible and want to help shape the future.
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