Face the facts with... Charles Eddelstene

 "...We delivered the first jets last month. The response on the part of our clients is unanimous: they're thrilled by it, which does not surprise me: the [Falcon] 2000EX is probably one of the best aircraft we've ever made..."

Q: How is Dassault weathering the current economic crisis?

A: Considering the situation, we didn't expect 2003 to be a wonderful year for us. Unfortunately we have been proved right. Coming on top of feeble growth in most of the world, the weakness of the dollar is testing us hard. We know business is made of cycles, and we're prepared for it. The downturn started more than two years ago: we just hoped it wouldn't last that long.

Our business jet activity, like that of our competitors, is tightly tied to macro-economics, so it does not perform well at the moment, whereas on the military side, it's pretty much life as usual.

We are an integrated company, so that business units function hand in hand, and work, be it military or civilian, can be shifted from one side of the company to the other, wherever there is excess capacity. In the last 6-7 years, we have tripled our revenue, without increasing headcount. This shows the robustness and agility of our organisation, and allows us to weather the crisis without making redundancies, unlike most of our competitors.

Q: What about the military?

A: The share of the military in our revenues, roughly a third, has been reduced in recent years, as we focused more on gaining market share in the less politically sensitive business jet sector.

Our military market is made of two segments: France and export. After several years of decrease, France's new government last year stabilised the defence budget and gave us guarantees. However, there are budgetary pressures, such as the EU stability pact, that may alter the deal.

As for the export market, orders may be big but they are not very regular. We logged three big orders a few years ago for Abu Dhabi, India and Greece, and since then nothing. However, we have now started to deliver the aircraft to Abu Dhabi, so the share of military will increase this year.

Q: What can be the place of Dassault in the European defence industry? What do you make of "trans-Atlantic cooperation"?

A: I don't see consolidation in the near-to-medium term wherever there is advanced defence technologies involved, such as in combat aircraft. Each country is reluctant to share what they consider strategic technologies, even with their allies. Witness the Eurofighter fiasco.

Even mergers would not change anything as the pressures are political, rather than commercial or industrial. Until Europe is more integrated politically, there won't be proper sharing of technologies, and, in terms of business, there will be no synergies.

US companies have a monopoly in their home country, which spends only 1% of its defence budget on European products, whereas Europe buys 20% of its needs from US companies. So, they're happy to work with us to penetrate even more our markets. They lead the project and use the European companies they take on board as Trojan horses, which makes perfect business sense.

Q: What is the future of Rafale against the JSF?

A: Dassault sells to countries that do not want to depend on the USA for their defence capabilities. That's our niche: non-US combat aircraft represent 13-14% of the market. The war in Iraq has only exacerbated the two attitudes between those who do not want to rely on the USA and those who accept it.

Rafale already exists: it'll be with the French air force in 2005, and available for export the following year. Conversely, the JSF still is only a project, and won't be ready for export before 2015. In terms of performance, a recent re-evaluation in the Netherlands had Rafale a very close second to the JSF, which is excellent considering the JSF is only a paper aircraft.

We currently are in discussions with different countries, and I am confident orders will be signed.

Q: Are the strained relations between France and the USA affecting you in the business jets segment, considering the USA is your biggest market?

A: There are indeed profound reactions, including from existing clients who phone or write to us. I suppose this is due to the very virulent anti-French media campaign.

Right now, the market is so depressed anyway that we don't feel any pain, but I hope the feeling will not prevail for too long.

We are pleased, however, by the reaction of our employees in the USA who do stand right besides us. I also would like to remember that our biggest plant is in the USA, at Little Rock, Arkansas, and that the engines also are made in USA.

Q: What are the prospects for the Falcon 2000EX?

A: We delivered the first jets last month. The response on the part of our clients is unanimous: they're thrilled by it, which does not surprise me: the 2000EX is probably one of the best aircraft we've ever made. It allows crossing the Atlantic without any worries.

I am very optimistic on the future of this aircraft: in the early days of the Falcon 2000, sales were disappointing, but as soon as we made the first deliveries and customers started to see it, to fly it, orders rose. I am confident the 2000EX will have the same reaction.

Q: Why do you consider the Falcon 7X such a milestone for Dassault?

A: The Falcon 7X will be the first new generation business jet ever built, using fly-by-wire technology, based on Dassault fighter experience. The 100% virtual engineering process makes it the first third-millennium industrial product. Dassault has achieved leapfrog in terms of process with the 7X.

The Falcon 7X made a virtual flight late last year, and we plan the first flights in 2005, with certification and production starting in 2006. The 7X will confirm our position as leader in the up-market business jet segment: we've had to turn down some potential customers, as the first delivery slots available are in 2008! That's way too long for a corporate business jet.

Source: Flight Daily News