On the Record with JEAN-PAUL BECHAT, CHAIRMAN & CEO, SNECMA
"If I were in Louis Chenevert's shoes, maybe I would say
the same about losing the competition for the TP400. It was a usual
bidding process in the unusual turmoil of international politics.
I cannot believe Louis was so naïve as to think that on a European
defense program there would not be a natural preference." -Jean-Paul
Bechat.
The A400M bid conditions were on a level playing field,
but the Airbus program is European, not transatlantic, says Snecma
chairman and CEO Jean-Paul Bechat of U.S. claims that Pratt &
Whitney's bid to power the transport was rejected for political
reasons. "Louis Chenevert knows we are able to design engines-we
do so every day-and we win competitions against him on a commercial
and technical basis. We beat him that way too, with the new SM146
engine for the Russian Regional Jet."
The A400M award to Europrop, a consortium comprising Snecma, Rolls-Royce,
MTU and ITP of Spain, will further the European governments' goal
of bringing their aero engine industries closer together, particularly
Snecma and Rolls. This will be their first major military cooperation
for those two on a 'big' company level-existing collaborations are
mainly through Turbomeca and predate that company's ownership by
Snecma. For this reason alone it was important that the contract
to develop the Western world's most powerful turboprop be awarded
to the European companies, Bechat told Show News.
Yet it wasn't so crucial that the company would have taken a loss
to get on board. Commercial terms were difficult, but Snecma expects
eventual income of some 50 million euros a year from the TP400-not
a lot in relation to the company's annual sales of 6.5 billion euros.
"Snecma's business is based on hundreds of programs and this
will be one more of them, so yes, this engine is important, yet
not so important, depending on your point of view," Bechat
explained. "It certainly will not be a cash cow."
John Morris
Snecma might be the smallest of the world's four leading
aero engine manufacturers but its relationships with GE-especially
on the joint venture CFM56 engine-contribute one third of
its 6.5 billion euros in annual revenues. "So we are
not exactly lost on the map," says chairman and CEO Jean-Paul
Bechat of the need to consolidate Europe's aero engine industry.
Indeed, he regards his position as putting him in the catbird
seat. "We are watching-if any worthwhile opportunity
is open, we will look. But that does not mean we are hungry,
or have a strategy to consolidate," he told Show News.
Bechat claims to have done all he can for consolidating
propulsion in France, bringing Turbomeca, Microturbo and SMA
into the Snecma stable. The company is No 1 in France, and
shares the world's No 1 engine (the CFM56) with GE. "So
we are not under pressure to do something," he said.
Mergers and acquisitions have already made Snecma No 1 worldwide
in landing gears (Messier-Dowty) and nacelles.
Snecma had previously held talks with FiatAvio, since acquired
by Finmeccanica and the U.S. Carlyle Group. "There was
a possibility for FiatAvio to join Snecma," Bechat said.
"We tried but didn't succeed, as it needs the agreement
of both shareholders. We are not the ones who changed their
mind." And he added "One of the stories is cash"-a
commodity that FiatAvio's parent, Fiat, desperately needs,
and which right now is not abundant in the commercial aerospace
sector either for acquisitions or investing in joint ventures.
There are no talks going on with MTU, Bechat said. "They
are a big partner of Pratt & Whitney. We are more in the
GE club."
The French government's plans to take Snecma public are
on hold until the stock market improves, Bechat said, but
the company is now structured and running exactly as if it
were listed on the stock exchange, with highly visible accounting
and holding regular meetings with stock analysts. "We
are proving even in the midst of international turmoil that
Snecma is robust," said Bechat. Sales dipped just 6%
last year from 2001's record 6.89 billion, and earnings before
income and taxes declined to 9.5% of sales from 10.4%-but
both beat expectations, he noted.
