From The Top: Gaël Méheust, CEO, CFM International
In the latest in our From the Top series, where we talk to chief executives across the top businesses in aviation and aerospace, we met Gaël Méheust, the CEO of…
In the latest in our From the Top series, where we talk to chief executives across the top businesses in aviation and aerospace, we met Gaël Méheust, the CEO of CFM International (CFM) – a manufacturer of jet engines for single-aisle aircraft. He discusses the company’s financial performance, delivery delays and the options for Boeing’s mid-sized aircraft.
CFM was formed in1974 and is a joint venture between GE and Safran. In 2009, the partnership was renewed to run until at least 2040. Joint ventures are renowned for frustration and acrimony. What makes this one work?
Méheust commented: “I don’t know if you know but 80% of joint ventures die after five years, so we are very blessed at CFM that we found the right ingredients to make it work the way it does. There were very, very important choices that were made at the early stage. One was to decide that everything would be 50/50. We would share revenue 50/50. We would share the engine 50/50, all decisions, and that is definitely a key factor for success and so far, it couldn’t be better.”
He adds: “Within the status of CFM, what was decided at the very beginning was that the language would be English, not French, that the headquarters of CFM would be in Cincinnati, Ohio, so in the US. But, in compensation, the CEO will always be a French man. It’s not because I’m a French man that the balance will lean over France. Actually, I have two executive vice presidents that are working beside me. One is from France, one is from the United States, and it works perfectly. We have tremendous success in taking the right decisions on the consensus basis between GE and Safran. It has always been the case.”
The bottom line
On CFM’s financial performance, Méheust says: “We have had an amazing year in 2017. We have received more than 3,400 orders, which makes 2017 the second-best year in the history of CFM. When it comes to orders. 2,900 of them were LEAP engines, by the way.”
He said these orders were worth $46 billion in total.
Méheust adds: “On the production side, we also had an amazing year. We produced 1,900 engines, a record year. The previous record year was 2016 with 1,770 engines. It seems like every year now is now a record year for CFM in production.
“We are powering 75% of the single-aisle market.”
By Gaël Méheust, CEO, CFM International
“[In terms of] market share, we are powering 75% of the single-aisle market, whether we’re talking about the current generation or the new generation with the MAX, the neo, the C919. I mean, we are really, really in a wonderful position, I have to say.”
Shifting the backlog
However, this has brought its own manufacturing challenges and CFM has been running behind schedule in producing LEAP jet engines for Airbus and Boeing.
Méheust comments: “It’s a fact: We have a backlog of 15,000 engines. Now, we have to produce all those engines. It sounds like a good problem to have, to be honest with you, but the quantities we’re talking about are phenomenal. This year, we are going to produce 2.5 [times] more LEAP engines than last year and by 2020, we will be producing more than 2,000 LEAP engines per year. This is an unprecedented ramp up in the history of aviation. That’s what we have in front of us.
“By 2020, we will be producing more than 2,000 LEAP engines per year. This is an unprecedented ramp-up in the history of aviation.”
By Gaël Méheust, CEO, CFM International
“Now, of course, we have been preparing for that. The two parent companies of CFM, Safran Aircraft Engines and GE Aviation, have invested, I would say, more than a billion dollars over the last decade to create new production facilities or for agreed production facilities. We have also taken the strong commitment to double-source all critical parts in the engines and that programme is almost done. We are 95% done and we’ll be finished by the end of the quarter, so it’s of course a very important step to secure the deliveries.”
And of the delays?
“We are, I would say, a handful weeks of weeks behind the schedule right now, and working hard to recover,” Méheust says. “We have actually demonstrated an ability to produce 20 engines per week. That’s what we are doing right now, so this will help us catch up, and we will catch up. We will catch up most likely in the course of the second quarter, definitely by the end of the year.”
“We will catch up most likely in the course of the second quarter, definitely by the end of the year.”
By Gaël Méheust, CEO, CFM International
Looking ahead
Momentum is building around Boeing’s new mid-sized aircraft. The aircraft is likely to require an engine of 40,000-50,000lb thrust.
Méheust said: “If the requirement falls within 18,000 and 50,000 pounds of thrust, which is the agreement we have on CFM, yes, it will be a CFM engine.
“Regarding the architecture, when we come back a little bit in the past and look at how we handled it with the LEAP, at the time we reviewed [around]18 different architectures because it’s not simply saying direct drive or geared. I mean, there are so many combinations of modules and architecture that you can pick for the right engine for the right aircraft, and so we are doing the same process.
“We are not disregarding a geared turbofan but it looks like the direct drive engine is also offering a lot of potential, a very good solution, and so we’re looking at both.
What keeps you awake at night?
One question we ask all our From The Top interviewees: What keeps you awake a night?
According to Méheust: “Well, a few years back, when I was thinking about how to do as [well] as our peers at CFM, it was difficult to think that we could reproduce what the founding fathers of CFM had done. Think about it, 100% of the Boeing market, 60% of the Airbus A320 family market.
“Now, with the LEAP, we have 100% of the Boeing MAX market, 60% of the Neo market. We have another book of 14,200 LEAP engines. I mean, it’s very difficult to have nightmares at night when you are in a situation like that, so I sleep very well. I have no problem sleeping.
“And when I wake up in the morning and I look at myself in the mirror to shave, I’m thinking, ‘OK, well, as the CEO of CFM, you have the nicest challenge to have, which is to produce this phenomenal quantity of engines that has been ordered. All the attention right now is focused on succeeding with the ramp-up. That’s where we are putting all our efforts.”
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