(Recasts, adds CEO comments, background)
By Cyril Altmeyer and Tim Hepher
PARIS, April 25 French engine maker Safran
reported higher-than-expected first-quarter revenue on
Tuesday, buoyed by aerospace services, and told investors it was
pushing ahead with plans to increase production of its LEAP
civil jet engine.
Safran confirmed its 2017 outlook and said its adjusted
revenue rose 5.5 percent to 3.982 billion euros ($4.36 billion).
It also said it continued to hold merger talks with French
seats maker Zodiac Aerospace, after outlining an agreed offer in
January, but declined to discuss how they were going or how it
might go ahead with the two-pronged bid and merger plan.
Zodiac said on April 14 it would delay publication of its
half-year results by a week from April 20, saying it had too
much on its plate due to the talks.
Reuters reported this month that Safran is exploring plans
to lower its $9 billion bid for Zodiac Aerospace and
may simplify its structure amid continued turmoil at the seats
maker and pressure from its own shareholders.
British hedge fund TCI renewed criticism of the deal on
Tuesday, saying Safran should suspend the talks pending an
Safran Chief Executive Philippe Petitcolin said the company
was "not distracted by this or that investor which chooses to
express itself publicly".
Despite doubts raised by some investors over its plans to
buy Zodiac, Safran shares have risen since the talks began.
Jefferies analyst Sandy Morris said this may be explained by
a relatively trouble-free launch so far of the LEAP engine,
co-produced with General Electric in the CFM International
venture, as well as mishaps affecting rival engine maker Pratt &
CFM still faces a major hurdle in executing plans for LEAP
engine deliveries this year but there have been few problems so
far and the first Boeing 737 MAX is on time, he wrote in a note.
Deliveries of Pratt & Whitney's engines, which compete with
LEAP on the Airbus A320neo, have been slowed by various snags.
One expert said as many as 72 Pratt engines have been taken
off wing for inspection or repairs since entering service.
As of mid-April, industry sources say Airbus had delivered a
total of 100 A320neo aircraft since the fuel-efficient plane
entered service in January 2016, including 53 fitted with Pratt
& Whitney engines and the rest with CFM's LEAP engines.
CFM's shareholders have said they could deliver 450 to 500
LEAP engines this year instead of 500 stated earlier.
Petitcolin reaffirmed that CFM would be interested in a
possible new twin-aisle, mid-market plane being studied by
(Reporting by Matthias Blamont, Editing by Tim Hepher and Susan