The French aerospace group Safran launched in 2023 the process to acquire Collins Aerospace’s actuation and flight control business for $1.8 billion, aiming to strengthen its position in next-generation aircraft systems.
Given the limited number of competitors in this segment, the deal was always expected to trigger a detailed regulatory review—possibly involving targeted divestitures to ease antitrust concerns. As often happens, this uncertainty spooked investors, putting additional pressure on Safran’s share price.
Our antitrust assessment pointed to an eventual approval with remedies, and the key question became the scope of those divestitures rather than the outcome itself. But the real opportunity came from timing: almost simultaneously with the European Commission’s clearance, Brussels unveiled an €800 billion European rearmament package. Few companies stood to benefit as directly as Safran—precisely the kind of alignment between regulation and policy that creates value in our strategy.
REGULATORY EVENT
On April 4, 2025, the European Commission and the UK’s Competition and Markets Authority accepted the remedies offered by Safran to alleviate antitrust concerns and finally approved the acquisition. Safran offered to divest the entirety of its North American THSA business, which included sites in Canada and in the US, as well as assets in Mexico.
What’s the deal?
Safran acquired Collins Aerospace’s actuation and flight control business for $1.8 billion to strengthen its position in next-generation aircraft systems. With Collins Aerospace’s expertise, Safran secured a larger share of major aircraft platforms, including those from Airbus, Boeing, and military programs.
What was the main problem?
From the regulatory perspective, the main question was whether Safran could acquire all the actuation and flight control businesses from Collins, or whether regulators would ask the parties to divest parts of it, like the horizontal stabilizer trim actuators (HSTAs) or the thrust reverser actuation systems (TRAS).
If regulators requested only minor divestitures, as it happened, the deal was unlikely to be at risk. In fact, Safran already signed in December an agreement with Woodward to sell part of its North America HSTA business to appease regulators. Notably, Safran previously acquired the HSTA business from Rockwell Collins in 2018 as part of a merger divestiture, aiming to build a stronger actuation and flight control portfolio. With the addition of Collins’ primary and secondary actuation systems, Safran will be positioned to provide end-to-end actuation solutions.
Beyond regulatory concerns, the acquisition will strengthen Safran’s competitive position against American giants like UTC, Moog, and Honeywell, and in the current geopolitical landscape, it was hard for EU regulators to block the deal.
Despite horizontal overlaps in actuations and flight controls, there are other strong competitors both in Europe and globally that could offset any market power Safran could gain from this deal. This significantly reduced the risk of a negative decision and moved the conversation to the scope of the divestitures.
Regulators also looked at possible conglomerate effects from this merger, but given the EU precedents in this sector, this was not a concern.
One of the most sensitive hurdles for Safran in closing this deal was securing national security approvals from the U.S., U.K., and, unexpectedly, Italy. However, the company confirmed early in the antitrust review that it has already obtained all necessary clearances, leaving antitrust reviews as the final regulatory step.
In our view, antitrust authorities in Europe and the U.K. were unlikely to block the deal, particularly at a time when European policymakers are advocating for a stronger aerospace and defense sectors and promoting European industry champions, as it was ultimately confirmed.
COMPANY ANALYSIS
Few companies embody Europe’s industrial ambitions as clearly as Safran. The French aerospace group designs and builds the systems that keep both civilian and military aircraft in the air — from jet engines and landing gear to avionics and defense electronics. It doesn’t build planes; it builds what makes them fly.
Safran’s strength lies in technological depth and integration. Together with General Electric, it manufactures the world’s best-selling aircraft engine, the LEAP, which powers Airbus A320neos and Boeing 737 MAX jets. The company is also behind advanced flight-control systems, helicopter engines, and increasingly, the digital and cyber layers that connect aircraft to ground operations. This combination gives Safran a level of control — and dependence from clients — that few industrial suppliers enjoy.
But Safran’s story today is not just about engineering. It’s about geopolitics.
Financials: Cash, Margins, and Momentum
The company’s latest results confirm its role as one of Europe’s industrial anchors. In 2024, Safran generated €27.3 billion in revenue, up almost 18% from the previous year, with recurring operating income rising nearly 30% to €4.1 billion. Its operating margin reached 15.1%, driven by the recovery of air traffic and a booming aftermarket for spare parts and maintenance — a high-margin business that now accounts for roughly half of profits.
Free cash flow exceeded €3 billion, and the group ended the year in a net cash position, a rarity in heavy industry. Safran’s balance sheet is clean, its order book is full, and demand for both civil and military engines remains robust. For 2025, management expects another year of growth, with profit approaching €5 billion.
From a financial-analyst lens, Safran combines strong cash generation, low leverage, and solid pricing power — three ingredients that explain why it trades at a premium to peers like Rolls-Royce or MTU Aero Engines. The main question is how long it can sustain this momentum as defense and civil cycles diverge.
Strengths: Scale, Technology, and Policy Tailwinds
Safran’s engineering moat is formidable. Few companies master propulsion, flight control, and avionics at this level, and even fewer can integrate them across aircraft platforms. That makes Safran a critical supplier to Airbus, Boeing, and several defense ministries, giving it long-term visibility and political backing.
It also enjoys one of the most lucrative franchises in the industry: the maintenance, repair, and overhaul (MRO) business. Once an engine is installed, airlines keep paying Safran for decades through service contracts, software updates, and spare parts. These predictable cash flows are the foundation of its balance-sheet strength.
Then there’s policy. The European rearmament push following the war in Ukraine — including the EU’s €800 billion defense and strategic autonomy programs — has turned companies like Safran into de facto national champions. More European funding for drones, combat aircraft, and defense electronics means multi-year demand visibility for Safran’s technologies, from sensors to engine systems.
In other words: Europe’s security strategy is also Safran’s growth strategy.
Challenges: Cycles, Complexity, and Competition
Still, Safran’s position is not without risks.
The commercial aviation cycle remains its largest source of exposure. If airline traffic slows or aircraft deliveries are delayed, engine production and aftermarket revenue will feel it quickly.
The company’s cost structure is heavy — high R&D spending, skilled labor, and complex supply chains make profitability sensitive to disruptions or inflation. Integrating new technologies such as hybrid propulsion and hydrogen-ready systems will require billions in investment over the next decade.
Competition, too, is evolving. U.S. peers like Raytheon and GE Aerospace are consolidating and reinvesting aggressively, while Chinese and Indian players are catching up in civil aviation systems. Safran’s challenge is to keep its innovation edge without sacrificing returns.
Outlook
Safran enters 2025 in rare shape: debt-free, profitable, and strategically indispensable to Europe’s reindustrialization. Its combination of aerospace, defense, and digital capabilities gives it a unique hedge — growth from civil recovery and resilience from military demand.
For investors, Safran represents what Europe wants more of: technological sovereignty with financial discipline. For regulators, it’s a company whose importance now transcends markets.
