CFM International is cautiously optimistic that the overall industry recovery will continue. Business may not recover to the heady heights of pre-2001, but deliveries are are showing a welcome improvement. CFM president Pierre Fabre spoke to Guy Norris
Q: CFM International appears to have weathered the storm well over the past few years. Do you believe the worst is over?
A: Absolutely. Even at the end of last year it was still gloom and doom, but since the start of this year all the discussions we are having have been not how to cope with the downturn, but how to execute the ramp-up.
We are therefore cautiously optimistic - though not all the problems are being solved, particularly at the US airlines. But overall the economy is doing much better and this is bound to be good.
Every time we do a forecast it is higher than the last, and spare parts sales are up in the 30%-plus range compared with last year at this point. However, there is a bit of an 'overshoot' happening as so many aircraft are coming back from the desert, so it may end up at 15-20% by the end of the year.
Q: To date, CFM has booked 234 firm engine orders in 2004. By most measures this would be a good year, but for CFM this seems to sluggish. Will your orderbook pick up?
A: The orderbook is slow because relatively there was a lot of buying in 2001, '02 and '03. Yes we had a downturn, but the changes we've seen throughout the period have given rise to the low-cost carriers and that has meant new orders. Secondly, we have seen consistent growth in Asia. But you are right: overall, this year has been relatively slow compared with previous years. However, we see a lot of signs of options being firmed up. Looking into the crystal ball, we could see the year ending up in the 500-600 ballpark.
Q: Deliveries were down over the last two years by about 300 engines from the massive 1,000 engine per year rate reached pre-2001. Do you expect the rate to recover to that peak?
A: Deliveries are getting better. Right now we expect to deliver around 726 engines this year, and we should start to see the rate increasing to around 800 for 2005 and 2006, and come close to 900 in 2007.
Q: Several upgrade packages have been, or are in, development such as the CFM56-3 kit for the 737 and the -5C/P for the A340. How well are these performing and how important are they for sustaining CFM's market dominance?
A: In the old days, when we were still young, we had new engines in development more or less continuously. That is not the case anymore, and we think the 737 and A320 families - or something very similar to them - will be around for a long time. Therefore we have to come up with ways of improving the performance and value of the engines, and one way to do that is with upgrade kits.
One of the most fundamental cost drivers is time on wing, and both our -3 and -5C/P upgrades are doing well. Although I'm not saying the rising price of fuel is important, we actually get little credit for fuel savings and increasing time on wing is the big driver. An extra 1,000 cycles on-wing offsets the value of a 5% fuel saving. The -5C/P kit is performing well in service on the A340-300 with Swiss International and South African Airways, and KLM is the latest customer for the -3 upgrade which was launched by Southwest in 2001.
Q: Much has been made of the Tech 56 technology programme over past years, but there seem to have been few concrete results. What is the status of this?
A: We are concerned that if you don't invest in technology you are dead, and CFM has a strong interest to be there 30 years from now. Now we are looking at launching a technology insertion programme based on Tech 56 which we launched in 1998 as a way of keeping the technology level in the engine state-of-the-art. We cannot introduce some new technology if we don't have it in the first place, and that is why Tech 56 will continue. This insertion programme is the first application of Tech 56 tecnology on this level, and we hope to launch it sometime this autumn. The plan is to introduce it on the -5B and -7B flight line in early 2007, and also to make it available as an upgrade kit for earlier engines built from 1998 onwards.
Q: You scored a big success with the US Navy's recent selection of the 737-based Multi-Mission Maritime Aircraft (MMA). How important is the military side of the business?
A: Very big historically. The US Air Force is, for example, the largest single customer of CFM with the re-engined KC-135 and we are seeing more 737-based military derivatives such as the C-40 and AEW&C 'Wedgetail'. With the way the world is moving, we believe a lot more will make use of this platform with our rugged engine which, in the case of the US Navy, is very important to have when you are flying low above the waves.
Source: Flight Daily News