French Political Turmoil Casts Shadow Over Safran's Strategic Moves

The fall of the French government has incited political and economic uncertainty, potentially undermining investor confidence. Safran, a major aerospace supplier, highlighted concerns over defense sector funding amid political instability. Plans for a new carbon brakes factory are influenced by potential U.S. tariffs and energy price stability.

The collapse of France's government has sparked political and economic instability, worrying investors, according to Safran CEO Olivier Andries. The CEO mentioned Thursday that uncertainties could affect confidence in financial and industrial stakeholders, particularly as the rollover of the 2024 budget might negatively impact the defense sector.

Safran, partly owned by the French state, is a global aerospace leader with interests in defense and space. Andries is the first prominent French CEO to address France's political challenges following the government's fall. The nation's 2025 budget is uncertain after the toppling of Michel Barnier's minority government. Without a budget by Dec. 20, an interim administration might extend 2024 spending until a new government and budget are established.

Andries highlighted the pressure this scenario imposes on defense, noting the expectation of stable energy prices as Safran considers locations for a new carbon brakes factory. France, the U.S., and Canada are contenders, with stable energy supplies being crucial. The decision, expected in early 2025, will weigh on both political and economic factors.

(With inputs from agencies.)