Dassault shows signs of business jet market recovery

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In a year that opened with its Rafale fighter winning India's long-contested MMRCA competition, Dassault Aviation enjoyed a rise in its fortunes on both the military and business jets sides of the operation, with total sales rising 19% to €3.94 billion ($5.12 billion) and operating profit gaining 45% to €547 million on higher sales and better currency hedging.

But while Rafale deliveries held steady at 11 units and negotiations between France and India continue over the export order, the most encouraging result from Dassault in 2012 was the continued recovery of its Falcon division, which was hammered by the business jet market collapse during the 2008-9 financial crisis. Sales rose nearly 16% to €2.8 billion and orders jumped to 58 jets in 2012 from 36 in 2011 - following a net negative nine orders in 2010 and negative 163 in 2009. The scale of the market collapse is evident in Dassault's 2008 Falcon order count of 115.

Speaking in Paris on 14 March, newly appointed chairman and chief executive Eric Trappier - who replaces the retiring Charles Edelstenne - said of business jets: "The uncertain evolution of the world economy and in particular of our historical markets, the United States and western Europe, encourages us to remain vigilant."

He added that the weakness of the US dollar "remains a strong and not easily controllable constraint because of the spasms of the international financial system".

However, for 2013 Trappier says Dassault is hopeful of a recovery in the "convalescent" business jet market, particularly in the USA. Deliveries are expected to reach 70 units, up from 66 last year and 63 in 2011 - though still far short of the 95 Falcons handed over in 2010.

Rafale deliveries in 2013 will remain steady at 11. Dassault, he added, remains "mobilised" to deliver the 126 aircraft that are expected to be ordered on completion of negotiations with India.

Dassault's financial situation remains solid. A sharp fall in borrowing costs during 2012 and increased contribution from its 26% holding in the recovering Thales Group helped lift net income 58% to €510 million. Though the backlog dropped 9% to €7.99 billion, orders rose 16% to €3.33 billion, with Falcon obligations more than offsetting a decline on the defence side.

Cash available at 31 December 2012 was €3.76 billion, up by €486 million over the year and comfortably in excess of turnover.

Other highlights of 2012 included the first flight of Dassault's Neuron stealth unmanned combat air vehicle and the establishment of a Falcon aircraft services business in China. This year, the entry-level 2000S was certificated on 11 March, and first delivery is scheduled for the second quarter. The 2000LX evolution - 2000LXS - is expected to achieve certification in the first half ahead of delivery later this year.