*

Safran-GE joint venture produces LEAP engines for Airbus,

Boeing ( BA )

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CFM venture also competes with independents for repair

services

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Maintenance capacity under pressure due to strong demand

(Adds context, quotes from paragraph 4)

By Tim Hepher

BRUSSELS, Oct 29 (Reuters) - French jet engine maker

Safran set out plans on Tuesday to invest more than 1

billion euros ($1.1 billion) and hire 4,000 people worldwide to

"radically scale up" its maintenance network as the aviation

industry tackles congested repair shops.

The plan follows strong demand for LEAP jet engines that

Safran co-produces for Airbus and Boeing ( BA ) with GE

Aerospace and is expected to boost Safran's share of the

aftermarket, where engine makers make much of their income.

Safran and GE Aerospace produce the engines through co-owned

venture CFM International, the world's largest engine maker by

number of units sold, which is celebrating its 50th anniversary.

Engine maintenance has become a major industry headache as

efforts to boost fuel efficiency increased the wear and tear on

engines in certain climates and engine makers struggled to bring

on new capacity fast enough to keep pace with a boom in demand.

Analysts say that has meant longer waiting times at repair

shops, exacerbating aircraft shortages and putting pressure on

engine makers to accelerate their capacity expansion plans.

Jean-Paul Alary, president of Safran Aircraft Engines, said

Safran aimed to quadruple its in-house capacity to 1,200 shop

visits per year by 2028. "It's a sprint," he told reporters.

Safran unveiled its strategy at a recently inaugurated

engine service centre outside Brussels, the first of six new or

expanded sites due to add capacity by 2026.

As part of the expansion, French President Emmanuel Macron

signed an agreement expanding Safran's presence in Casablanca

during a visit to Morocco late on Monday, one of a number of

business deals boosting ties following diplomatic tensions.

CFM's LEAP engines exclusively power the Boeing 737

series and are available as a choice on the Airbus A320neo in

competition with Pratt & Whitney's Geared Turbofan.

'QUICK TURN'

Jet engines are typically sold for little or no profit at

the outset, or even at a loss, with manufacturers making most of

their profit in services spread over the life of the engine.

The LEAP engine, introduced in 2016, has only just started

to generate major overhauls that take place every 6-8 years.

But Safran's Brussels plant is busy handling "quick turn"

visits to address the harsh climate issues, ahead of the upgrade

of a key engine component designed to improve durability.

CFM competes for maintenance contracts with airlines and a

network of 14 independent repair shops including five key

players.

It aims over time to supply about half the market for LEAP

repair services, expected to reach a total of 5,000 engine

visits a year by 2040, Safran said.

Services made up 65% of Safran's core propulsion revenues in

the third quarter.

The latest maintenance expansion in repair shops comes as

CFM and other engine makers are struggling to keep up with

demand for new engines amid kinks in the global supply chain.

Airbus earlier this month singled out CFM as a "bottleneck"

delaying jet deliveries, but Safran insists its services growth

will not distract attention from ramp-up plans for new engines.

"There is no (services) investment that would jump ahead of

the investments we make for new engine production," Alary said,

adding Safran would continue to invest heavily in its factories.

While Airbus is clamouring for engines, Boeing ( BA ) is having to

balance its intake with the crippling effects of a strike.

Alary said Boeing ( BA ) continued to take LEAP engines for its 737

assembly line to help keep a cornerstone of its supply chain in

fit condition, but was doing so at a "relatively reduced rate".

($1 = 0.9242 euros)