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CORRECTED-UPDATE 1-Safran says watching Eramet aero unit Aubert & Duval

(Corrects to show Safran (not A&D) identified its key suppliers, paragraph 4)

PARIS, Oct 30 (Reuters) - The head of French aerospace group Safran said on Friday it is closely watching specialist materials supplier Aubert & Duval (A&D) and did not rule out taking a stake in the troubled Eramet unit, one of its critical suppliers.

Mining company Eramet said in June it had launched a strategic review of A&D, after severe economic damage from the coronavirus crisis, and would consider all options.

French newspaper La Tribune later reported that Safran and planemaker Airbus were considering taking control of A&D to prop it up alongside Ace Aero Partenaires, an aviation recovery investment fund to which both have contributed cash.

Safran CEO Philippe Petitcolin said on Friday it had identified its key suppliers during a risk review.

“Aubert & Duval is one those critical suppliers and so we’re watching very closely the future of Aubert & Duval which seems a little complicated,” Petitcolin told reporters.

But any move to rescue the company would not signal a shift in Safran’s broader reluctance to buy out suppliers.

“We don’t seek to vertically integrate our supply chain but to ensure we can continue to produce in the long term,” he said.

“That’s our objective. Whether that means taking a stake, that’s possible, but there is also the (Ace) fund.”

A&D is seen as emblematic of the turbulence hitting suppliers in the Occitanie region, southwest France, where a total of 40,000 aerospace jobs are seen at risk.

Its advanced superalloys are used in engines for the French Rafale fighter and the LEAP commercial engine, co-produced for Boeing and Airbus by Safran and General Electric.

Airbus is also A&D’s biggest direct customer.

Industry sources have said talks remain at an early stage with Airbus and Safran, which is also one of Boeing’s biggest suppliers, uncertain about how to structure any co-operation.

Airbus and Ace were not immediately available for comment. (Reporting by Tim Hepher; editing by Jason Neely)

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