French rocket engine manufacturer Safran has its eye on buying Raytheon Technologies’ Collins Aerospace’s actuation and flight control business. The companies announced the purchase deal late last month and Safran disclosed its rationale in a phone call with analysts on July 21. The $1.8 billion deal is expected to close late next year, pending regulatory approvals, and is mostly targeted at computerizing aircraft systems.
The deal, Safran CEO Olivier Andries said in the announcement, will “position us more strongly for the next game in play,” referring to the next generation of aircraft.
The company’s contributions to the Airbus A320 and Boeing 737 programs supports venerable lines of aircraft, but successors are planned in the mid-2030s or so. Since developing aircraft takes years, that means that discussions with manufacturers for parts and systems will be underway soon, if they haven’t already started.
The acquisition may position Safran slightly better for those discussions, and ironically, the acquisition would also make Safran a supplier for the F-35 fighter jet. The company already supplies engines for a rival system, the Rafale.
Safran officials also said the acquisition would bring the “highly complementary” Collins’ actuation and flight control business under Safran, with potential revenues accruing in commercial aircraft, military aircraft, and helicopters. They pointed to “attractive exposure to valuable and recurring aftermarket revenue streams,” which would have implications perhaps for the space business as well.
Safran’s space program
Investing in space programs often takes years or decades of lead time, and therefore requires companies to find a source of funding that will allow them to survive while they bet on something that will pay off in the long term. Safran’s acquisition of Collins, if it is approved, may provide another source of revenue to increase the company’s margins. If it so chooses, Safran could then also put the money into the next generation of space rocket technology.
Safran designs a wide range of subsystems in space, including rocket propulsion tech, space optics and radiofrequency systems for controlling satellites. It is perhaps best known for developing propulsion systems for the Ariane rocket series, which is readying to launch the new Ariane 6 as soon as the fourth quarter of 2023.
With rockets, the discussion among analysts lately has been a growing concern about SpaceX occupying an outsized market share due to its ability to launch rockets quickly and consistently while reusing many of the key components. Europe does not have a fully reusable launch system at this time, but Arianespace — the key supplier for European programs — may be able to deliver on that with a newer generation of rockets later in the 2030s.
European standards for space propulsion are also becoming stricter, with the community wishing to use more environmentally-friendly fuels. Typically, these fuels are more expensive and produce a lower thrust than traditional propulsion, but that is beginning to change with research and development — along with government incentives to move towards “green” technology. It may be that Safran could develop newer propulsion systems in a decade or so that are even greener and more efficient than the current generation.
The full implications of this acquisition for space business may be seen for years, after the emergence of new markets becomes more apparent. That said, other key related changes in space as of late include shifts to laser communications for higher-bandwidth transmissions, and updates to space debris guidelines to bring unused spacecraft back to Earth sooner to reduce the chance of trouble once a satellite is completely out of fuel.