An interesting piece of consolidation news has been coming from France on September 5: aerospace giant Safran Group is in negotiations with another aerospace giant, Thales Group, to acquire its aeronautical electrical systems or avionics business. The transaction, once completed, will nicely complement Safran’s portfolio of engines interiors, and systems and make it an equipment manufacturer that covers the whole electrical chain. Avionics consolidation coming up between Safran and Thales.
Stephane Cueille, CEO of Safran Electrical & Power, says in a media statement that the acquisition of the Thales business units “will give us even greater competences over the electrical chain, thanks in particular to their leading skills in electrical conversion. The complementary nature of our expertise will also enable us to provide the market with ever more relevant and effective solutions.”
For Thales, “this project would provide our aeronautical electrical systems teams with an excellent environment in which to develop and would enable them to bring their leading expertise in electrical conversion, power generation and motors to Safran Electrical & Power. In consequence, the proposed acquisition would provide these activities with solid prospects in a market that is showing dynamic growth. More than ever, it would allow Thales to focus on developing its world-class critical avionics solutions,” said Yannick Assouad, Executive Vice-President of Avionics of Thales.
The proposed acquisition includes Thales Avionics Electrical Systems and Thales Avionics Electrical Motors, which are based in Chatou (Meru) and Conflans-Sainte-Honorine in France as well as in Singapore and Orlando. The business unit, which is part of Aerospace, generated some €124 million in revenues in 2021 and employs 600 staff. Goodwill of Avionics was valued at €365.9 million on December 2021, Thales says in its financial statements.
Various OEMs use Thales avionics
Thales’ avionics portfolio includes flight deck systems, flight management systems, flight control systems, autopilot systems, so-called integrated modular avionics, and head-up displays. Airbus uses them on the A320neo family, the A350, and the A380, ATR on the latest -600 models, Boeing on the 787, and Sukhoi on the Superjet. But they can also be found on business jets from Bombardier, Dassault, and Gulfstream as well as on military aircraft like the Airbus A400M and Embraer KC390 (main picture) multirole transporters, the Dassault Rafale and Mirage, and the Eurofighter fighter aircraft, plus on various helicopter models.
Thanks to new Rafale orders to France and Greece, order intake in Q4 2021 was 33 percent up. The avionics aftermarket was seeing a thirteen percent increase in sales, although organic growth of Avionics was at -3 percent. This trend continued in the first half of 2022, with aftermarket sales showing double-digit growth but sales of new systems lagging behind. This is the result of the “persistent softness” of the widebody aircraft market, Thales said. Following the sanction on Russia, Thales no longer supplies systems to Sukhoi.
The consolidated net profit for Thales in 2021 was €1.134 billion, up from €492 million in 2020. Sales were €16.192 billion versus €15.371 billion. In HY1 2022, the net profit was €560 million versus €454 million, with sales at €8.256 billion versus €7.669 billion.
The acquisition by Safran is subject to regulatory approval and also needs consultation with employee representatives. Safran hopes to conclude the transaction somewhere in 2023 but isn’t specific on any date.
