Julian Moxon/PARIS
CUT-THROAT competition from the USA and the slide in the value of the dollar mean that Aerospatiale will be hard-pressed to reach its target of break-even in 1995, says president Louis Gallois.
The state-owned French manufacturer has been struggling to reduce its debt burden, but is suffering massive losses following the collapse of the US dollar.
"We are used to operating at a rate between Fr5.5 and Fr5.8 to the dollar," says Gallois. "But Aerospatiale has no answer to a dollar standing at less than Fr5."
A gain of more than 25% in productivity has been achieved over the past five years, which Gallois notes is "about the same as Boeing", but he says that much of the improvement has been swallowed up by the undervalued dollar.
The company has also managed to reduce its losses from Fr2.4 billion ($470 million) in 1992, to Fr483 million in 1994. "Our 1995 objective was to achieve break-even. That now looks unlikely, although we're still aiming for it," he says.
Aerospatiale's executive vice-president Yves Michaud also points to US moves to gain market share through cut-throat pricing, claiming that Boeing brought down the unit price of the 100-seat 737-600s sold to SAS to only $17.6 million. Airbus was offering the A319 for $25 million. "Boeing wanted to implant the new 737 in Europe, and were prepared to pay the price for it," says Michaud.
Gallois says that Aerospatiale must continue to prepare itself for privatisation, although a final decision will be taken by the new French administration. He adds that Aerospatiale needs to achieve an equity-to-sales ratio of around 1:3 to be competitive.
On present performance, that would require the current equity of Fr5.6 billion to be boosted by at least another Fr10 billion. Aerospatiale has asked the French Government for the money to achieve what Gallois terms "strategic mobility".
Source: Flight International
