Safran Pushes LEAP-1B Profit Recognition Into 2027 but Holds 2026 Guidance, and Signals CapEx Above 6% of Sales "Each and Every Year"
Q3 2026 sales call, October 23, 2026: aftermarket stays strong while management resets the investment bar
Safran reported third-quarter revenue of EUR 9 billion, up 14.7% reported and 13.4% organically, and confirmed all of the full-year 2026 targets it raised in July. The more consequential disclosures for investors were two items that cut in opposite directions. A one-time profit recognition tied to the LEAP-1B RPFH contract portfolio, worth a "low 3-digit million euros" according to CFO Pascal Bantegnie, has slipped from 2026 into 2027. CEO Olivier Andriès also told analysts that capital expenditure will exceed 6% of sales every year going forward, a floor the group had not previously articulated this directly.
LEAP-1B profit recognition slips a year, guidance unchanged
Management attributed the delay to the Maverick HPT blade for the LEAP-1B, which will now reach the market in early 2027 rather than 2026. The profit recognition is linked to that introduction. Bantegnie said the amount shifting from 2026 to 2027 sits in the low 3-digit millions of euros, yet the company still reiterated its 2026 outlook, which implies underlying performance elsewhere is covering the gap. For 2027 the item becomes a tailwind, although Bantegnie cautioned that it is "a much smaller number than what we had for the LEAP-1A, because there are fewer LEAP-1B engines in the fleet being covered at this point with RPFH contracts."
The company also flagged continued monitoring of supply chain capacity and potential effects from the Middle East conflict. Andriès described the remainder of the year as largely locked in, saying that "the end of the year is somehow ballistic now."
CapEx to step up structurally across civil and defense
Responding to a question on possible A350 rate increases, Andriès said investment will rise materially. "In the years to come, we will have a significantly higher CapEx level than what we have experienced in the last years. I can say we will be above 6% of CapEx each and every year," he said, citing the narrowbody ramp to Airbus rate 75 and Boeing rate 63, widebody growth beyond A350 rate 12 and 787 increases, and a defense business he wants to grow at 20% per year through 2030. Free cash flow conversion will therefore be a point of debate. Safran remains in the middle of its EUR 5 billion buyback, having completed a EUR 375 million tranche and holding about 4 million shares, roughly 1% of capital, to be canceled by year-end.
On LEAP output, Safran delivered 535 engines in the quarter, up 5%, and 1,565 over nine months, up 26%. Andriès said the company will land "above 2,100" for the year and reiterated the path to 2,600 by 2028 and close to 3,000 by 2030. A fourth LEAP assembly line is planned in Morocco for the LEAP-1A, alongside investment in forgings and castings.
Spare parts: Q4 implies acceleration, and 2027 is about price
Civil spare parts rose 17% in dollars in Q3 and 24% over nine months. Andriès noted that the Q3 comparison was against a very strong 2025 base, and that sequential growth was 4% over Q2. The full-year target of mid-20s growth implies Q4 up "mid to high 20s" year on year, which Bantegnie explained by seasonality. Following the pull-forward of the CFM56 price escalation from December to August, Q3 is now the strongest quarter and Q4 is typically slightly lower sequentially. The August 1 CFM56 price increase was mid to high single digits.
The 2027 setup looks more price-driven than volume-driven. CFM56 shop visits are expected to plateau at about 2,400 in 2026, with 1,800 completed year to date, and Andriès said the same volume should hold next year. Work scope rose significantly in 2026 and is not expected to move up or down in 2027. Bantegnie put it bluntly: for CFM56, "revenue will increase, but only based on price." LEAP spare parts are the incremental growth driver. Formal 2027 guidance will come in February, and Andriès declined to reconcile Safran with GE Aerospace's low double-digit civil services growth outlook, noting that GE has more widebody exposure.
On whether stocking was inflating demand, Andriès said Safran has not seen an inventory build in shops. Bantegnie added that the company has "not yet burned" its backlog despite improved material availability.
Services: LEAP RPFH mix explains the expected Q4 slowdown
Civil services grew 19% in Q3 and 32% over nine months, driven by LEAP RPFH contracts, but the full-year target remains around 25%, implying a sharp Q4 deceleration. Management called this a mix effect, not a demand issue. Revenue under RPFH is recognized in line with costs incurred, so more quick-turn visits than performance restoration visits means lower revenue. Most LEAP visits are still light, partly because they were needed to install the new Maverick HPT blade. Bantegnie said LEAP revenue per shop visit is "significantly below" CFM56, citing GE's estimate of about half, and that parity is unlikely "before the end of the decade."
Retirements remain low, with a deliberate 3% and 4% baseline
Retirements are the key variable in the CFM56 aftermarket debate. Safran said only 130 aircraft have been retired since January, pointing to a 2026 retirement rate between 1.5% and 2%, below pre-COVID levels. The storage rate was stable at 7.3%. Andriès said airlines are back to about 80% of pre-conflict flying in the Middle East, no carrier has requested delivery deferrals, and engine removals still exceed shop inductions, so demand exceeds capacity. Kerosene prices are roughly double pre-crisis levels, which will erode 2026 airline profits, but he expects the industry in aggregate to stay profitable.
The company is not extrapolating the low rates. Baseline assumptions are 3% retirements in 2027 and 4% in 2028, an extra point per year. Andriès conceded the transition risk directly: "At some point in time, the CFM56 spare parts will sunset," and Safran's task is ensuring that this "coincides with the sunrise of the LEAP spare parts revenues." Asked about appraiser data showing weaker values for 15-year-old aircraft that could trigger earlier part-outs, he said Safran has seen no signal of acceleration yet. Management declined to quantify the queue of engines awaiting shop slots, but said visibility into 2027 is good and into 2028 lower, though still "pretty confident."
Defense: capacity additions, German entry and bolt-on M&A
Defense Electronics benefited from demand for HAMMER guided bombs, optronics, inertial navigation and missiles, helping Equipment & Defense revenue rise 16% organically to EUR 3.6 billion. Propulsion revenue rose 13% organically to EUR 4.6 billion, though military engine revenue declined on Rafale delivery timing. Safran is investing about EUR 100 million in a new plant near Stuttgart for portable optronics, gimbals and navigation systems, which Andriès called "our access door to the German defense market." It is supported by existing contracts, with a Rheinmetall partnership alongside direct sales. In Texas, a new TR40 missile engine assembly line will double capacity from 2028, with demand for the family, which powers the Naval Strike Missile, having quadrupled.
Safran is actively seeking bolt-on acquisitions in optronics, navigation and ISTAR, while staying platform agnostic. Programs referenced include the Rafale F5 upgrade, supported by a French-UAE intergovernmental agreement, with the T-REX engine lifting thrust from 7.5 to 9 tons, and the M30 3-ton engine for collaborative combat aircraft.
Avionics win, Turkish Airlines MoU and Interiors disposal
Airbus selected Safran's SkyNaute inertial navigation system for the A220, Safran's entry into commercial navigation. Andriès said it "breaks a decade-long monopoly" in the segment, with the pitch centered on operation when satellite signals are jammed or spoofed. CFM also signed an MoU with Turkish Airlines covering more than 300 LEAP-1B engines plus long-term services and a material services agreement for a future MRO facility.
In Aircraft Interiors, revenue was EUR 751 million, up 6% organically, with seat demand exceeding supply and supporting pricing. Safran has launched a process to divest its Cabin business, which generates about EUR 2 billion in annual revenue with positive EBIT and free cash flow. Certification constraints for seats persist and are an industry-wide issue, and Andriès warned that some seat deliveries, notably new business class products, may slip from late 2026 into early 2027, which could affect aircraft deliveries.
Currency, tax and rating
The hedge book stood at $61.1 billion, little changed from $59.5 billion at end-June, and the targeted hedge rate is unchanged. Safran is using the recent dollar strength, with EUR/USD near 1.12, to reinforce hedges. FX added 1.1 points to Q3 growth, while scope was neutral as the actuation and flight control acquisition roughly offset the sale of SPI. The draft 2027 French finance bill would extend the corporate surtax at 31.4%, against 41.2% in 2026, implying a cash outflow of about EUR 400 million for Safran, or EUR 500 million or more if the current rate were maintained. S&P upgraded Safran to A with a stable outlook from A- with a positive outlook, and an IFRS 18 workshop is set for December 3, with no significant bottom-line impact expected.