AIRSHOW - CFM engine orders drop, demand for spares flat

By Tim Hepher

PARIS (Reuters) - Engine maker CFM International saw orders drop by more than three-quarters in the first five months of the year and said demand for spare parts was flat year-on-year despite growing and ageing aircraft fleets.

The jet engine joint venture between General Electric and Safran had 303 orders through May, down from 1,342 a year earlier, Chief Executive Eric Bachelet said.

"If we have 600 at end of year, I will be happy," he said on Saturday at a news briefing ahead of next week's Le Bourget Airshow. There were fewer than five cancellations through May.

Bachelet added he was confident on deliveries through early 2010 but had less vision thereafter.

The level of orders for engines had been sustained by a lag effect between a record surge of aircraft orders in 2007 and 2008 and the time taken by airlines to finalise contracts for engines, which are sold separately.

While the air travel industry has been hit hard by recession and a slump in demand, the market for single-aisle aircraft, for which CFM is a supplier, was holding up better than for wide-body planes, Bachelet said.

However, in a sign of a deeper slowdown in the industry, Bachelet said sales of engine spare parts were broadly flat through May. After-market sales are crucial for profit margins as engines are generally sold at steep discounts.

"Normally we would expect this to grow as the fleet is growing and getting older," Bachelet said.