Welcome to the Safran Q1 2021 Revenue Conference Call. At this time, I would like to turn the conference over to your host, Olivier Andreas, Safran's CEO and Bernard Delpit, Deputy CEO and Group CFO, Mr. Andreas, please go ahead.
Good morning, everyone. Thank you for joining us To this Q1 2021 revenue conference, I'm joined by Bernard Delpitel, our CFO and Deputy CEO. I'll start the presentation with Q1 business highlights. 1st, on Slide 5, a few words on air traffic data. After a steep drop in traffic in January and especially in February, Narobody average shift kilometers are back in April at 57.6% of 2019, a level that is higher than in December 2020.
Well, the situation is very different from one country to another. In a global context of upsurge in new COVID cases, Pfaxyan is rolled out at very different paces all around the world. China weekly cycles are back Over 2019 balance, since mid March, for all engines. For CFM engines In week 16, cycles are up 12.6% compared to the same week in 2019. In America, after a nice increase in March,
CFM
around 29.5% compared to 2019. In Europe, on the other hand, weekly cycles for CFM engines stood around -70% to -75% compared to 2019 Since the second half of January, all in all, we see that capacity and flight cycles have been improving During the quarter, even if it has been bumpy and uneven around the world, Nothing that we see as of today leads us to change our traffic assumption, which Live on a gradual recovery driven by domestic air traffic. Current levels of traffic in China In North America, our encouraging, but uncertainty is still high, especially given the current low levels of traffic In Europe and in Asia, excluding China. Our traffic assumption is based on an increase of narrow body traffic that relies on an uptick In Europe and Asia, yet to come. Moving to slide 6.
In this challenging context and with Q1 2020 being still From pre crisis comparison, sales are down by 38% in Q1, including a strong negative Currency exchange Henry. In organic terms, the drop is 34 point 6, for other divisions. Bernard will give you more details in a minute. Sales in Q1 are in line with our recovery profile expectations In the context of uncertainty, which remains high over the timing of air traffic The recovery to start to materialize in Q3 and reconfirm our full year 20 21 outlook. On Slide 7 and 8, some Business highlights.
Let me start first with production. In Q1 20 21, combined shipment of CFM56 and LEAP was 2 14 engines Versus 3.26 in 2020. As for our LEAP Jeep engines in Q1, we delivered 188 engines. Total Backlog is above 9,200 engines as of March 31. Our market share on A320neo family is 59%.
Southwest Airlines announced the purchase of LEAP-1B engines to power 100 Boeing 737 Sales are scheduled for delivery from 2022 onwards. Today, the airline is CFM International's largest commercial customer, operating a fleet of more than 700, DSM powered 737. Stordenardian Airlines selected LEAP-1A engines To power 35 additional A320neo family aircraft, the order includes 8 Bear engines and Orest per flight our support agreement. In Q1 2021, The FM56 engines have been delivered. As expected, This was a halving compared to 54 engines in Q1 last year.
Overall, civil aftermarket decreased 53.4% year on year. As expected, Q1 2021 looks like a mix of Q3 and Q4 2020. On Slide 8, a few words on Business Highlights for Equipment, Aerospace and Defense Safran will provide the new generation Euroflea Fortein Optronic For 2 different Falcon based aircrafts, a dozen aircraft derived from the Falcon 2000 FELAS and the H Falcon 50 ms hypod models upgraded as part of the French Navy program to modernize Margin, surveillance and intervention aircraft. In aircraft interiors, Safran has won 3 6 for cabin orders, the first for the group. Soffe, which is our smart Category cabin system, modular innovation, a concept offering enhanced comfort for 6, 1 in passenger comfort Hardware category and our Red Bluetooth system 1 in IFE and Connectivity category.
Within Safran's latest economy class seat, Z200, is now available on the Airbus Safran Z110 and Z6006 have also been Elected by Airbus to provide its latest generation of short- and medium range economy and business class solution as SFECs For the A220 family, Safran will also provide Business Class C to a major U. S. For its safety 2021, Exelon. On Slide 9, as I explained it in February, restructuring actions are in progress in 2021. As a consequence, the The decrease in headcount is still going on.
From the end of 2020, it is now a decrease over 2 1,000 jobs. The job is larger in permanent workers and there is a slight uptick Thanks. All in all, the reduction in human resources cost that we have reached In Q1 2021, it's very similar to the savings achieved in full year 2020 With, on the one hand, a lower headcount and on the other hand, a lesser As we expect a backend loaded profile in activity, we keep our OpEx CapEx low in the beginning of the year. Our research and development expenses and our OpEx In Q1 2021 compared to Q1 2019, we are in line with savings that we have achieved in full year 2020. CapEx commitments are kept under pension.
We are not accelerating compared to H2 to 2020. All in all, we deploy efforts to keep our cost base as low as possible In an uncertain context, we should bet on a strong recovery in H2. We manage OpEx and CapEx in order to keep room for maneuver within the year. Now Bernard, the floor is yours for more
Good morning, everybody. Hope you're well. I start on Slide 12 with adjusted Revenue has reached €3,300,000,000 in Q1, down 38% With two comments on my side. First, currency impact was $180,000,000 which reflects weakening dollar or almost $0.10 When you compare Q1 2020 and Q1 2021, based on consensus, it's the kind of That we should experience during all year. My second comment is on organic growth.
Of course, We are now entering a period where comparison basis becomes easier, but I'd like to underline That in March, the numerator improved, our sales increased by almost 25% compared Q1 revenue per activity. Before going into the details by activity, the big picture is that services were down 40% and OE down 35%. In absolute terms, Propulsion drove the trend and in percentage, Aircraft Interiors was again the most impacted business. Revenue for propulsion was €1,561,000,000 down 37.5 or 34 percent organic, OE revenue in propulsion were down 30% due to the lead production rate decrease and CFM 56% continuous ramp down. Services revenue were down 41.4 driven by civil aftermarket revenue.
Civil aftermarket was down 53.4% in USD. This drop was mainly due to lower spare parts sales for CFM56 engines. 2 activities in propulsion have been resilient, Military engines sales, thanks to higher M88 OE deliveries as planned and despite the Temporary headwind in services as Q1 2020 was a strong comparison basis and the Helicopter Turbine activities with low double digit organic growth, thanks to support Equipment revenue stood at 1,000,000,000,000, down 33.1 percent or 29.4 percent organic. OE revenue in this division was down 33.4 With lower volumes in wiring and power distribution activities in nacell, landing gears, especially on the wide body programs for the Boeing 787 and A330, A350 Services and Equipment were down 32.2%, notably with landing gears support activities, Carbon Brakes Business and Nacelle Business. Defense activities in the Equipment division increased Organically by around 10%.
Aircraft Interiors revenue stood at $313,000,000 down 54.9 percent or 51.9 percent organic, OE revenue was down 51.9 Sales were again strongly impacted in cabin due to lower volumes for galleys and lavatories and floor to floor activities for Boeing and in seats due to lower volumes as business class seats deliveries were down 64% in Q1. Services revenue in this division were down 61.6%, driven by seat aftermarket as well as cabin spare parts and MRO activities. Some comments on Slide 14 with regards to our hedge book. The hedge book totaled $28,600,000,000 as of mid April. As a reminder, the book is composed of We scale burials spanning from 1.23 to $1.31 per euro, representing a risk on the size of the book and on targeted rates.
82% of these Kale barrels are above 1.25 dollar per row comparing to 41% only back in October 2020. The strong rise In the Eurodollar rate observed at the end of 2020 as paused, we took a respite to start building The hedge book for 2024, dollars 3,200,000,000 have consequently been added to the hedge book in order to initiate hedging For 2024, and of course, no change for 2021, where we expect the rate for the head rate at $1.16 per €1.15 per €1. On Slide 15, With 2 noticeable transactions in Q1, we signed a €500,000,000 bank loan with EIB To finance research on future aircraft propulsion systems. And also in March, we took a further step in diversifying and Extending Safran's debt maturity with a €1,400,000,000 eurotranche Issue with maturities of 5 10 years. It was Safran's first issue since the publication of our long term rating by the S and Ps, which is BBB plus with a stable outlook.
Consistently, the €1,400,000,000 remaining amount The 3,000,000,000 bridge facility set up 1 year ago that remained undrawn since inception has been canceled. That's all for me.
Thanks a lot, Bernard. This is time
for questions.
Thank you. We have the first question from Olivier Brochet from Credit Suisse. Sir, please go ahead.
Thank you very much, and good morning, Olivier Bernard and Cecilia. Thank you for taking the question. I will have a first one on the commercial aftermarket. If you could provide a bit more color on what has And between contract and spares as well as on the content of shop visits. And the second question On programs in wide bodies and destocking, do you think that this is something that you are Still seeing and how will it trend beyond Q2 and which program are more pronounced still?
Please.
Olivier, on civil aftermarket. The main driver, As always, the number of shop visits for CFM56, 2nd generation. This is what we focus on because this is what That's really matter for us. When we look at the number of shop visits in Q1 versus Q1 2020 has decreased slightly below 50% year on year, Which is broadly consistent with the air traffic data and specifically on the As in March, we are back towards a level which Slightly above December and which was in March at 55% of other Traffic 1 year ago. So this is in terms of shop Now when we come to spare parts, as Bernard has mentioned, the spare parts sales Thanks for that.
1 is a typical end of year, beginning of year phenomena As there has been anticipated purchases that have been made in Q4 from Certain airlines before the escalation in catalog this price and those anticipated These have been used in shop visits that have been performed at the beginning of this Sure. And second reason is that we have seen a slight On the work scope, in Q1, it does not mean that it is a Trend for the full year, but we have seen that on the quarter. In terms of aircraft retirements, the rate is today the The same as what we have seen in 2020. So there is a low number of aircraft Retirement, I mean the aircraft powered by CFM56, 2nd generation engine. On white bodies, I'm not sure, I picked up your question, But we had explained in February that we would be impacted by a A decrease of widebody production and deliveries on 787 compared to 2020, this is what happens.
You know that Boeing has still Quite a number of 787 that have been produced in the course of 2020 are not delivered yet. And so they have decided to decrease the rate of production of their 787 down to 5 per month. And this is basically what we have taken as The assumption for this year, and this is what we see, what we have seen during this quarter.
Okay. Thank you.
Thank you. Next question from Robert Stallard from Vertical Research. Sir, please go ahead.
Thanks so much. Good morning.
Good
morning. I have
a couple of questions for you. First of all, yesterday Airbus was talking about the possibility of a steep ramp in the A320 starting next year. I I was wondering if this may start to have an impact on Safran before the end of this year, particularly with regard to staffing and working capital? That's my first question. And then secondly, there have been some comments about airlines pre buying parts and services ahead of the summer I was wondering if you had seen any sign of that in your business?
Thank you.
Okay. I will answer on the first one and maybe Bernard on the second one. Yes, yes, we are all prepared for a ramp up That will start again in 2020. And so we are getting prepared for So, yes, indeed, there is going to be an impact, but we have planned for it. There is going to be an impact at the end of this year On, let's say, inventories, as we need to purchase long lead items and especially To be able to follow the rating in the 1st month of 2022, that's one.
And yes, indeed, we will have to restart again at the end of this Yes, especially on our
Okay. Airlines will start preparing the summer season, and we expect a strong increase in our civil The market in Q2 saw the drop in Q1. So I think it's partly because of what you Pre buying, but it's also because everyone is starting to be more optimistic and they want to be sure to have the potential to In the summer and for the rest of the year. So yes, we're going to see an improved Q2 for semi left market, much
That's great. Thank you very much.
Thank you. Next question from George Zall from Bernstein. Sir, please go ahead.
Hi, guys. Good morning, everyone. So coming back to the aftermarket, we're 1 third through the year. And as your slide Joe, the narrow body ASK trends are still below your severe case. So what type of growth do we need to get Your mid teens job of the growth for the year.
And also how we can dial that to your mid teens guide
We get for the short visit that really matters in terms of content And in terms of profitability. So the guidance that we've given for Shop visit is only related to 2nd generation shop visit. Okay. And we stick to this Mid teens increase in the number of shop visits. I think it will start to materialize In Q2, on a cumulative basis, of course, the positive will come on the Second half of twenty twenty one as the Q1 was really weak, but it will improve quarter after quarter.
And you will see that improving on a cumulative basis in Q4. I mean, I was referring to the
Yes. Regarding your first question on We have built our mid teen, It's a year on year growth on the number of shop visits for the guidance. That is our key assumption For the guidance, we have built on the trajectory for the narrow body ASK, which is steadily ramping up from Q1 to Q4. It will start around minus 50 percent around 50 percent of trade crisis level and with, Let's say, a level that goes to 80% of pre crisis level in Q4. I think we have Mentioned that in February.
So what you have to take into account and retain that basically it's built on an average Narro Body ASK in 2021, which is around 65% of the pre crisis level of 2019. This is a strong assumption that we have taken into account for the guidance.
Thank you.
Thank you. Next question from Ben Elam from Bank of America. Sir, please go ahead.
Yes, good morning. Thanks guys for taking the question. So I wanted
to come back to some
of the comments Made on scope, is there anything that you can read into that through the conversations that you're having With your airline customers about what's driving that slight decline in scope in Q1. Is it used serviceable materials being a higher Is it just them trying to keep spending low? Any color on that would be great. And then secondly, Lee, we haven't talked yet about GE90. I was wondering if there's any color on what you're seeing on the GE90?
Thank you.
Okay. On the scope, yes, yes, indeed. We see airlines willing to, let's say, Spare as much as possible and spend, as you say, as low as possible. So what we have seen for some shop This is, let's say, push out the fan Part of the world scope. So instead of having full scope shop visits, some airlines have decided to push out The fan or sometimes the LP turbine Part of the scope.
But once again, this is very slight. Today, it's very slight, and it's not enough to talk about the trend. It has happened. In some cases, it's not enough to talk for Trent? On G90, this is holding well.
And as Bernard mentioned on the IFRUST engine, the Year on year comparison is minus 45.
For spare parts. For spare parts.
And on the cycles, what we see for G90, it's about minus 30 on-site compared to pre crisis
Okay, great. Thank you.
Thank you. Next question from Henri Rich from Stifel. Sir, please go ahead.
Yes. Good morning, Olivier. Good morning, Bernard. Good morning, Cecilia. Can you hear me?
Not so well.
Okay. Is it any better now? You We are very far
from the margin. Let's try.
Okay. We'll try. Just 2. Firstly, just for in terms of the shop visit bookings that you and GE You can see for the remainder of the year, is that in line with what you Are you seeing sort of any sort of significant improvement in that? Are you seeing what are the On trends you can see.
And then the second question was just looking over at interiors, Olivier, Bernard, I remember you've been very clear that revenues would be quite lumpy this year. With the Q1 sort of more or less what you're expecting, was there anything unusual? And do the bookings that How for that business sort of give you confidence that it can improve as we go further through the year?
Okay. On shop visits, there is no bookings, If you wish, of shop visits. There is an horizon and we, of course, we interact With all airlines and all shops, and we ask for their forecast and Anticipated show visits. So we have a view of what could or should happen this year, which Basically, it's not different than what we have forecasted. So Today, it's more in line with our expectation.
It's not once again, it's not a booking per se. It's more an anticipation, which is consistent With our anticipation. What was the second question?
Aircraft
Interiors. Aircraft Interiors. Yes, Aircraft Interiors has been more severely As we have said and as Bernard has explained, so we have seen A number of push out deliveries and push out orders, Especially on the BFE activity. So This is what does explain what happened in Q1.
If I can elaborate on that, and I would On seats, we are seeing airlines not canceling We're just postponing the timing of deliveries. So Q1 was Extremely strong weak, sorry. And I think we mentioned that we expected Q1 to be like a trough In terms of seat deliveries and especially business class seat delivery, and this is what happened. Now looking Forward, we our guys in the Seed business keep the same kind of Forecast for the midterm as we have not seen any cancellations. 1 of the weak area in the Business is also aftermarket because as airlines have not completely Resume flying, there is not much aftermarket.
That's why you've seen a 60% decrease in aftermarket. And also, it also explains why Aircraft Interiors Revenue was so low in Q1, but I don't think it changes the picture. Sure. We don't have a very clear view if there is or not structural change in this market, and we stick To what we said at the beginning of the year, so we expect that the Revenues will rebound in the second half of twenty twenty one and in 2022 and 2023 as Well, so there is no change in the way we look at this business as of today.
And interestingly, As we see as we have seen push out of actual Deliveries to the request of airlines, we have seen as well a pretty active Campaign activities. So we see a lot of requests for proposal and so on. So the campaign activity
This is back. Yes, it's back. And we mentioned in Press release that we have recorded a new line in contract with a major US airline to provide The first seats for A321XLR, which was a very, very good news for the confidence in our
Next Question from Andrew Humphrey from Morgan Stanley.
Just a couple. One was I wanted to clarify, I think, a comment you made on March revenue. I think you indicated that was 25% better than January February, did you mean that was basically kind of the sequential growth, say March on the average January February was 25% or the year on year? Yes. Okay.
Okay.
No, no, no. I say in March, Sales improved by 25% when I compared March to the average Month of January February.
Okay. And that's group wide?
Yes.
Okay. Thank you. And my second question was on was a follow-up on some of the pre buying activity that you highlighted ahead An anticipated more busy summer season. I wouldn't obviously expect you to go into detail on customers, but can you give us any additional detail around which regions you're seeing that activity in most strongly?
China and North America, which is consistent with what we See on the air traffic, on the domestic air traffic.
Yes. Okay. Thank you.
Thank you. Next Question from Christian Faison from Exane BNP Paribas. Sir, please go ahead.
Yes. Good morning, everyone. Thank you for taking my questions. 3 on my side, please. The first one, I was keen to get a high level comment on Performance of the various services activities in Q1, so you have equipment down 32, propulsion down 40 1 and in terms of down 62 in Q1.
Conceptually, can you make a comment on what's driving the difference in a pretty strong Between the services momentum in the 3 divisions, you explained quite a lot of propulsion, but To get a feel on the other one, and do you think that you expect this to reverse and behave actually exactly the other way around in the recovery phase, So stronger recovery in service interiors and propulsion and equipment. That's the first question. 2nd one, I wanted to get your view on the level of inventory of spare parts today in the MRO network. Do you know whether it's Sufficient to get to manage a good level of activity, do you think that there will be some restocking at some point? Or you just don't know?
And the third one is a follow-up on the OE production ramp, at least on the A220 neo for 20 20 2, 20 23. Can you say on your side what are the bottlenecks That have been identified and that will face the level of production that production ramp that you could do for the coming Yes. In the previous ramp, we had issues on forging and forging cash parts. It's still the same type Of equipment that will set the pace of ramp or are they different areas of focus right now? Many thanks.
Okay. So On your first question related to the aftermarket performance differences between the various Activities, go back to the key dynamics, underlying dynamics. On the propulsion, it's really directly correlated to the air traffic and the flight Related to the air traffic and the flight cycles. So that's 1, on the equipment. You have on one size wheels and brakes, which is also correlated strongly with the air traffic.
And you have the other equipments where you Sometimes more calendar overhauls, which are not related to the actual flying hours, but are flying hours, but are more related to, let's say, calendar scheduling. This is why, I guess, I think this is why, let's say, the equipment aftermarket has Increased slightly lower than the propulsion aftermarket. On interiors, it It's really related to the airlines' health as it's own condition. So for seats, for cabin equipment, it's on condition. And For activities which are really BFE equipment, such as seats, it's still related to the The sales of the airlines.
So this is why it has been quite strongly, more strongly impacted, even more strongly In Q1. On your second question related to the inventory of spare parts, I would say that most shops and airlines have consumed Their inventories of spare parts all along 2020, and that was a way for them You know, reduced spending. So we start 2021 with a level of inventory all over the world and the Sure. Which is lower than at the start of 2020. And your third question, What are the bottlenecks for the ramp up that we will have to go through for the especially for the A320neo and the MAX Well, same as before, I mean, let's say, the Critical points are going to be upstream.
So forging and casting are the areas where we will have to be extremely
Thank you very much for your concerns. It's really helpful.
Thank you. Next question from Thierry Dubois from Aviation Week. Sir, please go ahead.
Hello, everyone. Thanks very much for the opportunity. I would have 3 questions, please sorry, 2 questions, please. The first one is about Human Resources. You alluded to, correct me if I'm wrong, savings in Q1 That were similar to the full year 2020, it seems huge.
Can you explain and elaborate? And the second Question is a quick one. You commented on the push out of deliveries at the request of airlines. Was that on seats only or across Interiors in general? Thanks very much.
So on human resources, yes, we've said that we Basically, we keep ongoing as in 2020. As I said, we have continued to reduce our head Count in Q1 by 2,000 people. But at the same time, we have, Let's say, a lesser share or percentage of Short term working. So at the end of the day, when we look at the overall human resources costs in Q1 versus, Let's say H2 2020, so post March crisis, We are online, same vein. And your second question, Peugeot deliveries, It's mainly on seats, I would say, because seats is an activity which is really usually exposed to BFE.
It's really BFE. It's a BFE activity. So this is where the push out has impacted The top line. On interiors and the other cabin equipment, let's say, it's more balanced between BFE and And therefore, the push out of deliveries and the top line impact on the other cabin equipment has been less.
Thanks.
Thank you. Next question from Celine Fornaro from UBS. Madam, please go ahead, sorry. Bonjour. Thank Thank you
for taking my question.
I have 2, if I may. The first one, I'll give it a try, Bernard, but Last year, you were kind enough at the Q1 to provide some color regarding the cash dynamics. So maybe you could, at the high level, do Something similar for Q1 2021. And my second question would be regarding the dynamics of Services in Equipment. And really trying to understand if the wheels and brakes, as you said, is linked to traffic.
So did you see a small pickup in Q1 as well and particularly in March? And should we expect Still the equipment services to recover sooner than the propulsion Services. Thank you.
Okay. Good morning, Celine. On cash, what I can tell you is that Even if it's not an earning call, what we've seen since the beginning of the year for cash was good. And it's not different, I think, from what our peers As I said during their Q1 call, the start of the year is good. So it might not be a completely balanced year between H1 and H2.
I think H1 Q1 might be a little bit better than what I expected at the beginning of the year. Now there are still a lot of Uncertainties, including due to the ramp up at the end of the second half To get prepared for 2022 rates that will be demanding in terms of Inventories for the supply chain. So free cash is okay. I don't change the Full year guidance, but it might be more balanced more imbalanced, sorry, than what I previously thought. On Services, Yes, indeed.
Wheels and brakes is strongly correlated to traffic. And what we've Increased versus what we had in January February. So it's moving in the right direction. It's still far From what we had, of course, before the crisis, but it's moving in the right direction. So we have no reasons to believe that it's not going to follow the
Thank you for the color.
Thank you. Next question from Christophe Menard from Deutsche Bank. Sir, please go ahead.
Yes, good morning. I have three questions. The first one is on Green Time. In the fiscal year 2020 call, you mentioned that you haven't seen any real impact of green time on Engine Propulsion MRO. Has it been the case in Q1?
And is it also one of the potential reasons for the reduced Workscope, that was the first question. The second is the SCAF engine agreement, I think it's out, so It's fresh news. So I don't know whether you can comment on this and whether there were any I mean, I guess you must be satisfied with this agreement, but any compromise that had to be made to make it possible? And the last question is on the recovery in engine MRO. Remember that before the crisis, you had to you were planning to invest in Capacity.
And the expectation is probably that engine MRO on your side will recover very steeply at this point in time. So I was wondering When will you need to resume that investment in capacity in engine MRO capacity and also probably in HR to be Prepared for that potentially steep ramp up at a given point in time, I don't know whether it's going to be in Q4 or beyond.
Okay, Christophe. So your first question on Green Time, I think we said The green time impact in 2020 was less than what we We did not say that there was no impact at all, but we The impact was less than expected. And what we've seen in Q1 2021 is basically in the same vein. So it's a continuation of what we've We've seen in the last quarters of 2020. So we've not seen a big Change here versus what we have seen in 2020.
On SCAF, your Question on scarp. Yes, indeed. We have reached an agreement with ITP at At the beginning of this week, this is good news. And I can tell you that there has been no compromise We had made very clear that certain key underlying principles had So what we have called the best asset principle, meaning that the allocation of work has to be decided According to the demonstrated capabilities. And as a consequence, basically, This is where we are.
So this agreement is satisfactory because ITP TPE will be responsible for modules on which they have demonstrated their capabilities, So the LP turbine and the nozzle of the engines. And we, Safran, we And we shall be responsible for the first section of the engine. So no compromise. On your third question related to ENGINE MRO, as you know, we have pushed out our Decision to increase our internal capacity in terms of engine MRO to Aligned with the LEAP MRO ramp up. So I confirm that.
So it's not for 2021, so we shall look at the situation again in 2022 onwards. No time yet to invest in an additional shop for LEAP engines. Not
Yes. Okay. Thank you very much.
Thank you. Next question from Nick Cunningham from Agency Partners. Sir, Please go ahead.
Thank you very much. Yes, just to come back to the Green Time question. So, Essentially, from what you're saying, the engine fleet hasn't actually burnt up much green time in 2020 or Q1, which would tend to imply that demand should track aftermarket demand should I was wondering about the equipment business. Has there been some burning of green And the fleet as far as equipment is concerned, other equipment. And therefore, when recovery comes, should we see some sort of ASK plus growth In those businesses, as we've generally seen in previous business cycles.
And following up on that, Is any of that expectation built into your second half recovery plans? Thank you.
Okay. Nick, I will take this one. The concept of green time in equipment is not something very familiar to me. In fact, we have 2 kinds of aftermarket in the Equipment division. First, wheels and brakes, where it's, I would say, completely And they cannot optimize, if you wish, the fleet, and they don't do All right.
So well, I'm not aware of any kind of optimization where they switch a brake from 1 aircraft To another start. I'm not familiar. I will try to know if it happens, but I have not heard of And for the rest of the Equipment division, in fact, it's not fully driven by the traffic. It's more when it's a broken fix business model. So The recovery in sales will come after the recovery of traffic, not because of Optimization or credit timing, but just because they will need, I mean airlines will need aftermarket once they have to fix Something on the aircraft.
So the concept of green time is really something that is, I think, relevant When you look at engine aftermarket, but when it comes to equipment and aircraft interior, I don't see that as A driver of our aftermarket revenue.
And on propulsion, yes, indeed, as airlines You sunk in time. At some point in time, you're absolutely right. There's going to be a catch up, but we don't expect that in 2021. We expect that more in 2022 onwards.
Thank you. And just coming back Equipment, I mean, there's clearly scope though for airlines to cannibalize parked aircraft, which then have to be repaired before they can come back to work As traffic recovers, do you see any of that going on?
No, not aware of that.
Not aware of that. No.
Thank you.
Thank you. Next question from Chris Hallum from Goldman Sachs. Sir, please go ahead.
Yes. Good morning, everybody. So first, Bernard, just to follow-up on the helpful comment you made March being up 25%. Are there any big variations by business lines or divisions in that momentum This is January February, which surprises you. And then secondly, perhaps this is a bit of a long term question, but have there been any Assetty cuts for CFM56 MRO in the independent network.
I just wonder whether we face some capacity constraints in 2022 and 23. And what risk of not having servicing slots available could cause a bit of a rush amongst the Operator, to get maintenance done earlier than expected. Thanks.
Hi, Chris. I will not go into the details of the March Figures, business to the business. And I would say it was across all divisions in improvement.
Okay. And Chris, we've not seen any capacity cuts in the CFM56 NRO We've seen a lot of furlough, short term working, Etcetera, etcetera. But before the crisis, everybody was prepared to face a strong ramp up in the MRO business. So no, we have not seen any cuts.
And I get that everybody is planning for a strong ramp up again. So no one has Really definitely closed or reduced their capacity. It's a temporary We'll grow, but it's not structural.
Okay. Thanks. That's helpful.
Thanks. Okay, guys. I think We are now over. Maybe the last question?
Yes. Last question from Geraldine Bragg from Redburn. Sir, please go ahead.
Good morning, guys. One question, please, on retirements, Which have been low so far for CFM56 Gen 2. At what point do you expect them to step up? And do you expect them to step up? And when that does happen, how quickly will the kind of USM from those engine Start to become kind of available in the system.
I guess I'm kind of driving at what happens to the average revenue per shop visit once Actually starts to get retired, please. Thank you.
Okay, Jeremy. On extra three elements, We have said in February that basically what happened in 2020 was, let's say, kind of a good surprise because we expected more Retirements and what has actually happened. And we quoted to you a number of, if I remember well, it was Something like 60 airplanes that have been retired in the course of As I said, Q1 of 2021, same rate. So we expect it's going to pick At some point in time, it is going to pick up. Considering the The availability of used parts in the marketplace, We see the used parts as being a significant, How could I say, driver for revenue per share visit in 2020 If you remember well, we have said, and this is what we continue to expect, That there is going to be year on year, let's say, more and more availability of used parts.
Yes, indeed. And we expect it just to compensate the price escalation of our new parts so that We plan for a stable revenue per share visit in the years to come, especially in 2020 Our guidance in 2021 is relying on overall revenue per share visit that is stable versus 20
Thank you. And that includes the, bit of the aftermarket, the USM mark That you are exposed to as well.
Sorry? So, you have some sorry,
you have exposure to the USM market as well? Yes.
Yes, indeed. We are the biggest sales.
So that's all kind of factored into your guidance throughout? Yes, absolutely.
Absolutely. Thank you. Thank you. Thank you. Thank you, everybody.
Have a good day, and thank you for your attention.
Bye bye. Thank you.
This concludes the conference call. Thank you all for your Sebastian, you may now disconnect.