FLUG REVUE September 2006: Interview with CFM boss Eric Bachelet

September 2006

VIP-Interview

ERIC BACHELET

President and CEO CFM International

FLUG REVUE: Do you expect 2006 to be another record year for CFM?

Eric Bachelet: I expect it to be a good year. We had a record year last year with 1640 engines sold, and that was the highest number ever. And this year we have had a very strong start: by the end of June we stand at 1270 CFM56 engines. We expect by the end of the year to be over 1500. Whether we break last years record is difficult to predict, but it is going to be very good year.

FR: How do you value the current market and what is your view for the next few years?

Bachelet: The current market is strong. The demand is there, and in terms of production the sales record we have been receiving ensures that production will be at high levels for the coming years. We think it is going to last a few years, probably somewhat longer than we saw in the previous cycle. But of course you have geo-strategic factors that could change that over night.
The great thing about the market is that there exists a very diversified demand in terms of new business models with low-cost airlines expanding and legacy carriers operating in many parts of the world. And it is geographically a very diversified base too, with China and India leading the pack, but the Middle East, Latin America, Eastern Europe and South-East Asia doing equally as well.

FR: In what geographical areas do you see the largest potential?

Bachelet: China has been very strong in the last few years. This is going to continue. China has 1.3 billion inhabitants and about a thousand planes. India numbers 1.1 billion people and 200 airliners. If you compare those figures with the United States and their 300 million inhabitants and over 6000 planes, you see that the potential is huge. China has been ordering very steadily during the last few years and we expect it to go on.

FR: With the possibility of having an A320 family assembly line in China will there also be CFM56 engines assembled in China?

Bachelet: We will support Airbus in their project to set up an assembly line in China. We already have a significant number of work and industrial operations done in China. We have parts manufactured, we have services operations and we have modules assembled there. We are used to being in China.

FR: What is your current market share and how do you think it will develop over the coming years?

Bachelet: If you look at the past ten years, CFM has been selected to power over 55 percent of the aircraft ordered, and what we see today is consistent with that level.

FR: Do you get increased interest for your engine from low-cost carriers?

Bachelet: Our engine has always been the favorite of low-cost carriers since the beginning with Southwest. The low cost model was established by Southwest operating CFM56 engines. We have been doing very well in this segment.

FR: Do you see Pratt & Whitney's recent move to produce CFM parts as a challenge and how do you react to it?

Bachelet: First of all we have been faced with PMAs for a long time. It is not a new challenge. Of course the endeavor to tackle the safety relevant and life limited parts raises new questions concerning certification warranty or product support. The engines are complex systems. The parts themselves are complex. And they interact in complex ways with the entire engine.

FR: So would you consider a CFM56 with P&W parts still to be a CFM56 engine?

Bachelet: At some point I think such a CFM56 will cease to be a real CFM56 engine. We have concerns about what others are doing to our parts and the reliability of our engines.

FR: Could you imagine that CFM pursues a similar way, let's say for the V2500?

Bachelet: Definitely no. We have limited resources, and we put these resources into improving our products to better satisfy our customers. There is no way we are going after other OEM's engines. We are not going to mess with other people's engines. One of the reasons we believe our customers will stick with CFM is what we call the CFM solution and the value that we bring. And we continue to invest in our product line.

FR: What are your plans for the future regarding the Airbus A320 advanced?

Bachelet: We are introducing an upgrade called Tech Insertion, and this will be introduced in production in the middle of next year. It will more or less coincide with the introduction by Airbus of their advanced A320. So although the programs were launched independently our upgrade contributes to the Airbus program. We are of course introducing the same upgrade on the engines of the Boeing 737 line.

FR: What are the advantages of the upgrade?

Bachelet: The advantages are longer time on wing, reduction of maintenance cost with longer life for a number of components and an initial fuel burn advantage of 0.5 percent. Together with improved performance retention this leads to about one percent improvement of the fuel burn advantage over the life of the engine.

FR: For what time period do you see a successor for the CFM56?

Bachelet: I cannot answer this question. We do no call the shots. The aircraft manufacturers make this type of decisions. What we can say is that the current products, the engines, are good, and we keep raising the bar with initiatives like Tech insertion. Developing a new engine is truly a technological challenge.

FR: How do you prepare for it?

Bachelet: We are very actively working on developing the technologies that we deem necessary to bring the benefit and the value justifying new engines on the future narrow-body aircraft. We have a number of studies going on in our LEAP56 initiative, encompassing a full range of technologies in different areas of the engine. They range from composite materials technologies, core improvements and more integrated advanced controls up to design and manufacturing processes. We are doing architecture studies as well. And it isn't only paper studies; we are also conducting component testing.

FR: Do you expect to compete with one design as it is right now or could there be two engine competing with CFM?

Bachelet: Well, there will be competition for sure. How the competition is going to shape up we do not really know. Definitively CFM will have an offer for the new aircraft. It will be a CFM56 product.

FR: Would you consider a maintenance organization by CFM for this new engine?

Bachelet: We do not know yet. Parts of our evaluations are the business models that will be adapted at that time. Our options are on the table.

FR: Do you anticipate any new applications for the present CFM56 like for example a growth version of the Superjet 100?

Bachelet: No, we do not have such plans.

Questions by Patrick Hoeveler

From page 19 of FLUG REVUE 9/2006

Last updated 15 August 2006

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