Competing in both military and business aviation has long been Dassault Aviation's strength. That and the fact that - as one of the industry's few privately owned giants - it can act nimbly to exploit opportunities as they arise.

Eighteen months ago, the boom in business aviation was powering the French manufacturer's revenues. With its flagship Falcon 7X in production, Dassault had a range that could match in every segment Bombardier and Gulfstream. After a series of failed attempts to secure an export deal for its Rafale fighter, its military arm looked considerably weaker.

Dassault Rafale 
 © Dassault
Rafale looking favourite in the United Arab Emirates

Today, with business aviation in freefall, the balance has shifted. Although the company still has to clinch that elusive overseas contract, the Rafale looks favourite in the United Arab Emirates, thanks to ever-closer political and military links between Abu Dhabi and France. Dassault also has high hopes in Brazil - which has strong ties with Paris and whose air force already flies Mirages - as well as, longer term, in India.

Dassault's veteran chief executive Charles Edelstenne will not be drawn on his chances. "The French government sees [a win in the UAE and Brazil] as very important politically," he acknowledges. But he adds: "I will tell you after the decision how important their influence has been."

POLITICALLY IMPORTANT

Dassault's almost unique status in the European aerospace sector was also a factor in its purchase in May of the roughly one-fifth stake in Thales held by Alcatel-Lucent.The stake gives Dassault and the government a combined 52.4% stake (and 62.1% voting rights) in the diversified avionics and defence systems group. Until late last year, Edelstenne was insisting Dassault was not interested in extending its shareholding in Thales from its then 5%. However, the perilous state of Alcatel-Lucent - and the fact that the only other serious potential bidder, EADS, was preoccupied with the A400M - persuaded the French government to push Dassault to reach into its pockets.

Edelstenne admits it was the only realistic option. "There are not many businesses that could pay almost €2 billion [$2.8 billion] in cash," he says. He also maintains Dassault has a long and successful record of working with Thales, which supplies, among other things, the Rafale's complex electronics suites, which account for 30% of each aircraft's value. Now, he says, technical teams will be able to share information more closely and reduce costs by working efficiently.

However, he rules out a future full takeover, declaring that he is not a fan of corporate mergers. "Sixty per cent are failures. Why should I take that risk?" he says. "They have their culture and we have ours. Look at past mergers, people spend more time worrying if they will sit on their chair for much longer than worrying about customers and product."

He pays tribute to President Sarkozy's efforts in promoting Dassault exports. "Before his election, what prospects did we have? Since then, he has decided to export French goods. He knows we cannot depend on growth at home to get us out of trouble."

Business aviation, for now though, is languishing. A spate of cancellations left Dassault with negative first half net orders totalling €1.13 billion. The company has reduced staff at its US facility in Little Rock, Arkansas by 150 and even in France workers are being furloughed.

On recovery prospects, he says: "Tell me when the global economy will improve: that is when business aviation will get better. The two are very correlated."

Source: Flight International