One of the companies that never ceases to impress me is Safran — $SAF (+3,44 %) . Because its business model is structurally so sound that I want to explain it to anyone who isn’t familiar with it yet.
Every LEAP engine installed today on an Airbus A320neo or Boeing 737 MAX generates aftermarket revenue over its lifetime via RPFH contracts: Rate per Flight Hour. Safran receives money every time the aircraft flies. Not just once, but for 20–25 years.
In 2025, revenue grew to EUR 31.3 billion—a 14.7% increase over the previous year, with record-high LEAP deliveries and a strong aftermarket. Operating profit rose by 26% to EUR 5.2 billion, and the margin expanded by 150 basis points to 16.6%. Free cash flow: EUR 3.9 billion—despite massive investments in new production capacity. The Propulsion division—the core of the business—delivers even more: in the first half of 2025, the Propulsion division’s operating margin stood at 23.3%, an increase of 3.4 percentage points.
The LEAP is still young. Deliveries of the engines began in 2016—the first major maintenance cycles are only just beginning. Safran expects LEAP aftermarket revenue to more than triple between 2024 and 2028. In 2025, 1,802 LEAP engines were delivered—a 28% increase compared to 2024. In the fourth quarter alone, the delivery rate rose by 49% year-over-year. Each of these engines represents a future aftermarket revenue stream that will not truly take off for another 5–8 years.
In the first quarter of 2026, revenue grew organically by 23%, with spare parts sales rising 29% and services increasing 43%. LEAP deliveries exceeded the 500-unit-per-quarter mark for the third consecutive time. Safran has raised its EBIT target for 2028 to EUR 7.0–7.5 billion and plans to deliver approximately 2,600 LEAP engines this year. Cumulative free cash flow 2024–2028: approx. EUR 21 billion.
Safran has a net USD exposure of approx. USD 16 billion per year — nearly all aerospace contracts are denominated in dollars. 2026, 2027, and 2028 are fully hedged with a target exchange rate of EUR/USD 1.12. This means: currency volatility is largely out of the equation for the next three years. The result is predictable.
Air traffic volume is the baseline assumption. Fewer flights mean lower RPFH revenue. Supply chain issues in LEAP production are a well-known issue—2024 was a difficult year, with 2025 set to be a catch-up year. Whether the ramp-up in 2026/27 goes smoothly remains a point to watch. And the strong euro remains a long-term structural headwind despite hedging.
Safran is not a cyclical stock. It is an infrastructure company packaged as an aircraft engine manufacturer. The installed base of LEAP engines, now exceeding 10,000 worldwide, is a stream of annuities that is just beginning to flow. Anyone who understands this also understands why the company beats guidance year after year—and why the 2028 targets may still be too conservative.
The stock is not a bargain. But anyone who values Safran as a traditional industrial stock is making the same mistake as someone who values Microsoft based on its CD-ROM margin. #stockanalysis
