I've been investing independently for a few years now - and one of the companies that always impresses me is Safran. Not because it's a hype stock. But because the business model is structurally so good that I want to explain it to anyone who doesn't know it yet.

$SAF (-1,17 %) - The best business model in Europe that hardly anyone knows

Safran builds engines. But that's not how they make money.

The real business runs after that - for decades. Every LEAP engine installed on an Airbus A320neo or Boeing 737 MAX today generates aftermarket revenue over its lifetime via RPFH contracts: Rate Per Flight Hour. Safran receives money every time the aircraft flies. Not once, but for 20-25 years.

The engine is the razor. The aftermarket is the blade.

What the figures say

2025 sales grew to EUR 31.3 billion - an increase of 14.7% compared to the previous year, with record LEAP deliveries and a strong aftermarket. Operating profit increased by 26% to EUR 5.2 billion, the margin expanded by 150 basis points to 16.6%. Free cash flow: EUR 3.9 billion - despite massive investments in new production capacities.

The Propulsion division - the heart of the business - delivers even more: in the first half of 2025, the Propulsion division's operating margin was 23.3%, an increase of 3.4 percentage points.

Why things are only really taking off now

The LEAP is still young. The engines were delivered from 2016 - the first major maintenance cycles are only now beginning. Safran expects LEAP aftermarket sales to more than triple between 2024 and 2028.

1,802 LEAP engines were delivered in 2025 - an increase of 28% compared to 2024. In the fourth quarter alone, the delivery rate increased by 49% compared to the previous year. Each of these engines is a future aftermarket revenue stream that won't really kick in for another 5-8 years.

In the first quarter of 2026, sales grew organically by 23%, with spare parts sales up 29% and services up 43%. LEAP deliveries exceeded 500 units per quarter for the third consecutive quarter.

The 2028 targets

Safran has raised its 2028 EBIT target to EUR 7.0-7.5 billion and plans around 2,600 LEAP deliveries this year Cumulative free cash flow 2024-2028: around EUR 21 billion.

Currency hedging - the underestimated factor

Safran has a net USD exposure of around USD 16 billion per year - almost all aviation contracts are in dollars. 2026, 2027 and 2028 are fully hedged with a target rate of EUR/USD 1.12. This means that currency volatility is largely out of the equation for the next three years. The result can be planned.

The risk

Air traffic volume is the basic assumption. Fewer flights mean less RPFH revenue. Supply chain problems in LEAP production are a known issue - 2024 was a difficult year, 2025 the catch-up. Whether the ramp-up in 2026/27 will run smoothly remains a watch item. And the strong euro remains a long-term structural headwind despite hedging.

Conclusion

Safran is not a cyclical. It is an infrastructure company wrapped up in aircraft engines. The installed LEAP base of now over 10,000 engines worldwide is an annuity stream that is just starting to run. Anyone who understands this also understands why the company exceeds guidance year after year - and why the 2028 targets may still be too cautious.

The share is no bargain. But anyone who values Safran as a classic industrial stock is making the same mistake as someone who values Microsoft by its CD-ROM margin. #stockanalysis

Introduction

A young German-British company has taken a remarkable step: For the first time first time a prototype of a hypersonic rocket has been successfully successfully tested for Europe. And after just nine months of construction 😳 This test marks an important milestone in an area that has so far been dominated almost exclusively by major powers such as Russia, the USA and China.

_________________________

⚡️ 1st European hypersonic test flight successful 🚀

On February 3, 2026, the Munich-based startup Hypersonica launched its HS1 prototype from the Norwegian spaceport Andøya. According to the company:

• The rocket reached hypersonic speeds of over Mach 6 (more than 7,400 km/h).
• It covered a distance of around 300 kilometers.
• The prototype did not carry a warhead - it was purely for flight testing.
• A production-ready version is to be developed by 2029.

Hypersonica has thus achieved an unprecedented success for a privately financed European armaments and aviation project in the hypersonic sector.

_________________________

🧪 2. why hypersonic missiles are relevant

Hypersonic missiles fly extremely fast (faster than Mach 5) and are traditionally difficult to intercept. This gives them:

• ⇨ strategic importance in the field of modern defense systems,
• ⇨ high importance for future military technologies,
• ⇨ Influence on the geopolitical balance of power.

Only a few countries still possess such technology - Russia and the USA have already developed or deployed their own systems. Europe has so far lacked a comparable, sovereign solution.

_________________________

🇪🇺 3. Europe wants to become more technologically independent

The background to the project is not only technical ambition, but also geopolitical strategy:

• Europe is to become more technologically independent from the USA and other major powers.
• Public debates show that security policy and defense technology are seen as part of sovereignty.
• Hypersonica's success could strengthen Europe's role in defense and space technology.

Hypersonica was only founded in 2023, is based in Munich and has a subsidiary in London. The CEO and co-founders emphasize that the technology has long been neglected and that faster development cycles are needed.

_________________________

🧠 4. technical & strategic challenges

Hypersonic missiles are not only fast, but also complex:

• The engine is not the central problem, but
• combining high speed with precise control and stable maneuverability.
• Mach speeds generate enormous thermal loads that require special protection and materials.

Hypersonica wants to address these challenges and carry out further tests and developments in the coming years.

_________________________

👍 5. significance for industry & research

Successful testing is not only a technological step, but can also

• Boost investment in European aerospace
• Boost research networks between universities, start-ups and defense agencies
• Strengthen Europe's presence in a globally strategic technology

Competition and comparison: To date, the USA, Russia and China have also been working on their own hypersonic systems, which have significantly greater ranges. Europe's approach, however, is a fast, private development path, similar to the influence of companies like SpaceX on space development as a whole.

_________________________

Source: https://www.n-tv.de/wirtschaft/Muenchner-Startup-testet-erfolgreich-Hyperschallrakete-id30345240.html

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After years of turbulence, the global aviation industry is clearly picking up speed again. Passenger numbers are now almost at pre-crisis levels, but there is still a "pandemic gap" of around 30%, which is likely to be closed in the coming years. Forecasts predict annual passenger growth of 4-5% worldwide, and even up to 6% in Asia by 2044.

This will benefit manufacturers in particular, but also suppliers: $AIR (+0,04 %) , $SAF (-1,17 %) or $MTX (-0,65 %) MTU Aero Engines have full order books and stable margins.

For example, Airbus and $BA (-0,06 %) are considered structural winners in the industry due to their duopoly structures and the long-term visibility of their orders.

Airlines and airports, on the other hand, are much more volatile and are more dependent on the economy, energy prices and geopolitical developments.

👉 The complete analysis with detailed figures, market forecasts and company examples can be found in the verlinkten Artikel

Hello my dears,

and once again $MTX (-0,65 %) MTU is here again.

But I am pleased that $AVIO (-1,38 %) Avio has been included.

$SAF (-1,17 %)

At the Paris Air Show, Avio Aero, Safran and MTU Aero Engines laid the foundations for a multinational team to develop the engine for the next-generation European helicopter. A new and purely European helicopter engine is to be developed in a long-term cooperation, according to the agreement, which was announced by the three companies involved on June 18. The European Next Generation Helicopter Engine (ENGHE) is intended for the next generation of military helicopters in Europe, which are due to enter service around 2040.

EURA joint venture

Safran and MTU had already announced their collaboration on a new helicopter engine in 2023. Last year, the two companies founded a 50/50 joint venture called EURA (European Military Rotorcraft Engine Alliance) to develop the engine (ESuT reported). Avio Aero will now contribute its know-how and expertise in the field of military helicopter engines.

With equal work shares, the three companies aim to create an engine that combines reliability in service with affordable operating and maintenance costs. According to MTU, the cooperation between the companies will form the core of an extended and long-term European partnership in which other European nations will also be involved.

Features of the ENGHE

The companies say that the ENGHE will feature groundbreaking technologies. They will significantly increase its efficiency while reducing operating and maintenance costs. Such an engine meets the requirements of future military helicopter projects such as ENGRT (European Next Generation Rotorcraft Technologies) and NGRC (Next Generation Rotorcraft Capability).

The exceptional characteristics of the ENGHE will give these future helicopters improved capabilities [compared to today's models], the companies said. These include, in particular, a greater range and higher speed as well as improved maneuverability and increased availability. This will be supported by the hybrid-electric configuration. In addition, the drive will have lower fuel consumption and be 100 percent compatible with sustainable aviation fuel (SAF).

Objective

The next objective of the cooperation partners is a strong joint proposal in response to the European Defense Fund's specific call for tender for a next-generation helicopter engine. EURA will coordinate this proposal and submit it to the European Commission in October 2025.

Editorial team / gwh

https://esut.de/2025/06/meldungen/60806/kooperation-fuer-das-triebwerk-des-european-next-generation-helicopter/

$GE (+1,03 %)
$SAF (-1,17 %)

USA blocks engine delivery

China's aircraft manufacturer Comac will no longer receive any engine components from the USA for the time being. The Trump administration's decision could slow down production of the A320 competitor Comac C919 in particular, which flies with LEAP engines from the West.

China's own turbofan is not yet ready: the domestic CJ-1000A engine has been undergoing flight tests since 2023 and received approval from the Chinese aviation authority CAAC in the spring of this year. But until it is also approved for the Comac C919 airliner and can go into series production, there is still a lot of water flowing down the Yangtze River. For this reason, Comac is dependent on Western countries for the C919 for the time being - the new "China Airbus" has so far flown exclusively with LEAP-1C engines from CFM International. CFM, in turn, is a joint venture between the engine manufacturers Safran from France and GE Aerosoace from the USA.

This is precisely where the problem that the Chinese are currently facing begins for Comac and the C919. At the behest of US President Donald Trump's administration, they are no longer receiving any engine components from the United States for the time being. At least that's what the New York Times reports. "The Trump administration has suspended the sale of some critical US technologies to China, including those related to jet engines, semiconductors and certain chemicals and machinery," writes the daily newspaper on May 28. The US administration is responding to "China's recent restrictions on the export of critical minerals" to the US, which, according to New York Times informants, "threaten to cripple the supply chains of US companies."

China and the USA at loggerheads

This decision from Beijing is in turn a reaction to the punitive tariffs imposed by Washington on Chinese products. Although these have been suspended in the meantime, China has not eased its embargo on critical minerals to the satisfaction of the US government, according to the New York Times. President Trump has therefore "halted shipments to China of some key products and technologies that are made only in the United States, demonstrating the government's power over global supply chains."

Problem for Comac?

It is unclear whether Comac will directly feel the effects of the latest blockade on the production of the C919. The aircraft manufacturer has not yet issued a statement on the subject. The Chinese can presumably cover a certain period of time with engines and components that have already been delivered. Ideally, the disputes between China and the USA will have been settled at least to the extent that key components from both economies can be delivered to each other again. Nevertheless, the events are likely to provide China with further motivation to press ahead with its "import substitution" programs with increased vigour in order to make itself independent of foreign influences in aircraft construction in the long term.

Parallels with Russia

In the northern neighboring country of Russia, people are already reminded of their own fate when looking at China. The situation evokes "certain associations with the ban on the supply of American Pratt & Whitney PW1400G engines for the MS-21 aircraft", comments the website aviaton21.ru, for example. The USA, like all other Western countries, had put the export of aviation components to Russia on hold in the wake of the Russian invasion of Ukraine at the end of February 2022. In response, Russia - out of necessity - threw itself fully into the development of the domestic PD-14 turbofan. "Thus, the Russian engine replaced the foreign unit and made it possible to continue the import substitution program, which will ensure the start of serial production and operation of the aircraft in a fully 'Russified' form next year," according to aviation21.ru. The fact that the Western sanctions set the MS-21 program back by years is another matter.

https://www.flugrevue.de/zivil/bekommt-der-china-airbus-c919-probleme-usa-blockieren-triebwerkslieferung/

$MTX (-0,65 %)
$AIR (+0,04 %)
$SAF (-1,17 %)

Good quarterly figures from Safran gave the entire aviation industry sector a noticeable tailwind at the end of the week. The shares of the French engine manufacturer rose significantly following the better-than-expected data. The two DAX-listed companies MTU and Airbus also took off in their wake.

Safran grew more strongly than expected at the start of the year. Turnover rose by 17 percent to just under 7.3 billion euros. The Group, which supplies engines to aircraft manufacturers Airbus and Boeing, among others, also benefited from acquisitions and the weaker euro in the first quarter compared to the previous year.

Adjusted for these effects, growth amounted to 14 percent. As is usual for French companies, Safran did not publish key profit figures for the first quarter. However, the Group confirmed its forecast for the current year. For 2025, Group CEO Olivier Andriès is still targeting an increase in sales of around ten percent. Adjusted operating profit is expected to climb to between 4.8 and 4.9 billion euros. However, possible consequences of the tariff conflict triggered by the USA have not been taken into account.

Analysts initially stated that Safran had exceeded expectations in the first quarter. Ian Douglas-Pennant from UBS justified this above all with the growth in the spare parts business, which is also often regarded as very important by analysts at MTU. David Perry of JPMorgan spoke of a "solid start to the year". Douglas Harned from Bernstein Research wrote that Safran's targets for this year were looking more and more achievable. Although experts lacked concrete information on the subject of US tariffs, this did not deter investors from buying.

https://www.deraktionaer.de/artikel/aktien/dax-gewinner-mtu-und-airbus-wieder-im-steigflug-das-steckt-dahinter--20379008.html

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$IE0002Y8CX98 (-0,25 %) - WisdomTree Europe Defense UCITS ETF - EUR Acc

TOP 10

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https://api.fundinfo.com/document/b9034489473e1a780e6657260ca4fb58_248438/MR_DE_de_IE0002Y8CX98_RES_2025-03-07.pdf

"The index was developed by WisdomTree, Inc. ("WT"). The selection of European

companies in the index is based on their share of sales from the defense sector. The Index also seeks to exclude companies associated with weapons that are banned under international law, such as cluster munitions, anti-personnel mines, and biological and chemical weapons. The index also seeks to exclude companies that violate certain generally accepted international norms and standards, such as the principles of the United Nations Global Compact.

At least 20 stocks that meet the revenue share criteria as well as additional minimum requirements regarding market capitalization and liquidity are selected for inclusion. The selected companies in the index are weighted according to free float-adjusted market capitalization - adjusted by the exposure score - while complying with the upper limits and criteria defined in the index methodology.

The index is rebalanced every six months."

#wisdomtree
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#thales

The $IWDA (-2,11 %) is now back below its value at the beginning of the year, which is probably due to Trump's announcements on punitive tariffs.

As I have a low US weighting in my portfolio, the return is much better. For the time being, the assumption that the US economy will develop rather negatively in the coming years and that international investor confidence will also decline seems to be confirmed. Europe and Canada are now working together more closely than ever before and I believe it is likely that new trade agreements beyond CETA will be concluded. These could, for example, be agreements on the supply of raw materials or weapons, which would then benefit both partners without using the USA as a mediator (as is currently the case). Public concerns about the potential threat of war are growing, which is of course particularly good for insurance companies and the arms industry. The greater the fear in society, the greater the need to insure against this fear, for example through term life, building protection, household contents or legal expenses insurance. Primary insurers such as Allianz ( $ALV (-0,46 %) ) and reinsurers such as Hannover Re ( $HNR1 (+0,4 %) ) and Munich Re ($MUV2 (+1,73 %) ). I do not $MUV2 (+1,73 %) is not in my portfolio because I don't want to overdiversify and therefore only hold Hannover Re, which has a more stable historical performance.

If there is a fear of war, people also want to protect themselves physically, which is why they are more willing to spend a larger proportion of their economic output on defense.

All of this would benefit my portfolio. With Thales ( $HO (-0,43 %) ) I am up 75% since the beginning of the year. Safran ($SAF (-1,17 %) ) has also gained 25%. However, I am more convinced by Thales, as they offer cyber security products/solutions in addition to military machines. We still have a lot of demand in this area and new security concepts have to be developed all the time as the old ones can suddenly be circumvented at some point. The products are therefore never fully developed, which is why innovation is always possible, enabling higher prices due to higher quality.

So my conclusion is this: I am currently cautious about US equities. The insurance and defense sector will benefit regardless of whether war actually breaks out or not and I therefore expect returns above the market average.