PARIS - Safran is bracing for the potential financial fallout of a looming trade war and intends to pass on any tariff-related costs to its airline and original equipment manufacturer (OEM) customers. During an analyst briefing following the release of its first-quarter revenues, Chief Executive Olivier Andries stated the company would not be shy in applying surcharges to mitigate the impact of tariffs stemming from initial moves by US President Donald Trump. Safran, a key partner in the CFM International engine venture with GE Aerospace, operates a significant global manufacturing network, leaving it vulnerable to tariffs as parts frequently cross international borders before final assembly.
Safran is actively optimizing its logistics flows to bypass the US when unnecessary to avoid tariffs. It is also using free trade agreements like the United States-Mexico-Canada Agreement (USMCA) which exempts aerospace products. The company is also exploring the use of bonded warehouses as an additional protective measure.
These strategies can reduce its exposure to tariffs but cannot eliminate it. Safran's agreement with GE Aerospace for the CFM joint venture includes a provision for equal sharing of transportation costs, including tariffs, which will subsequently be passed on to customers.
Safran is also facing pressure from its own suppliers seeking to pass on inflationary cost increases, with some even threatening delivery disruptions. Andries emphasized the company remains focused on completing timely deliveries to airframe and airline customers despite a volatile trade environment.
Safran reported a 16.7% increase in group revenues to €7.2 billion in the first quarter, driven by strong performances in its propulsion, equipment, and interiors divisions. While maintaining its full-year guidance, the company has yet to factor in the potential financial impact of the rapidly evolving tariff situation.
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