Julian Moxon/PARIS

AEROSPATIALE'S NEW president, Yves Michot, says that the state-owned giant could be back in profitability this year, setting the group up for its merger with Dassault and privatisation within the next three years.

In an upbeat forecast, Michot says that early indications are that the group will end the year with profits of more than Fr500 million ($100 million). Heavy restructuring charges have left Aerospatiale showing a Fr1.4 billion loss in 1995, despite underlying improvements in its finances. The French group had not, however, been predicting a return to profits until next year.

Financial sources within the company attribute the improvement to growing contributions from its Airbus work and a turnaround in the fortunes of the space/defence business.

Michot says that the group is likely to be in a position to be privatised within the next two or three years. "We are now making ourselves ready," he says.

As part of the preparation, a cost-savings programme has been launched, which is designed to reduce costs by Fr3 billion before the end of 1998. The group has also slashed its debt over the past few years to around Fr3.6 billion, although analysts note that the company is still a long way from achieving the 33% debt-to-equity ratio which is considered necessary for privatisation in 1998.

A more immediate priority is the merger with Dassault Aviation, due to take place during 1997. The new company will have around 50,000 employees and a turnover of nearly Fr60 billion, making it the world's fourth-largest aerospace group (Flight International, 4-10 September, Aerospace Top 100).

The banks involved in the merger have already begun exchanging financial data on the two companies in preparation for the deal. Dassault vice-president Bruno Revellin-Falcoz, however, has suggested that some issues still need to be resolved before the final details are submitted to the French Government by the year-end deadline.

Revellin-Falcoz was speaking at the Farnborough air show in place of the company's president Serge Dassault, who is unable to leave France because of an international arrest warrant issued in Belgium in connection with corruption charges over arms sales to the country by Dassault Electronique, another Dassault family company.

The question of whether Dassault Systemes is included in the merger remains open, says Revellin-Falcoz. Michot had earlier indicated that the company would be included in the deal. Dassault Systemes, which produces the CATIA computer-aided-design system, recently sought a flotation of 17% of its shares on the US and French stock exchanges.

Revellin-Falcoz also suggests that Dassault would like to see the French Government take an integrated approach to aeronautics and defence electronics. Government policy has appeared to centre on creating two "poles of excellence" within the country; an aeronautics base around the merged Aerospatiale/Dassault and another in electronics based on Thomson-CSF, which is shortly to be acquired by either Lagardere or Alcatel as part of its privatisation.

"Integration between airframe manufacturers and electronics concerns is preferable. Merging aerospace companies on the one hand and electronics companies on the other is not the best solution," Revellin-Falcoz says.

Besides the Dassault merger, the Aerospatiale president also highlights other priorities for the company in the form of the 100-seat regional-aircraft project for China/ South East Asia and the sealing of the missiles/space alliance with Daimler-Benz Aerospace.

Source: Flight International