Dassault: keeping its edge

Paris
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Chief executive Charles Edelstenne vows company will retain independence and build on reputation for innovation

At 68, and after 44 years with one of Europe’s biggest aviation companies – six as chairman and chief executive – Charles Edelstenne’s enthusiasm is not ebbing. Edelstenne – who took over the running of Dassault Aviation from patriach Serge Dassault in 2000 – is confident of signing the first export deal for the Rafale soon and hopes he can take part in launching a supersonic business jet before he retires.

It is going to be a busy few years for the world’s last family-owned major airframer, which last month reported first-half revenues, profits and backlog all up strongly on 2005. Early next year, the Falcon 7X, the world’s first fly-by-wire business jet, and the ultra-long-range flagship of the Dassault fleet, will enter service – its 92-strong orderbook bolstered last week by a 24-aircraft order from fractional ownership operator NetJets (see opposite page). Around that time, the company is also likely to fill a gap at the bottom end of its range by launching a mid-size twinjet to compete with the Bombardier Challenger 300, Gulfstream 200 and Raytheon Hawker 4000.

On the military side, with deliveries of the Rafale to the French military ramping up, Dassault is looking beyond manned fighters by heading a six-nation European project to develop the Neuron unmanned combat air vehicle demonstrator, intended to come up with a successor to the current crop of fighters that includes Rafale and the Eurofighter Typhoon.

But, while Dassault may be set to take the lead in the development of Europe’s first unmanned warbird, a more pressing priority is securing the first export sale of the Rafale, an aircraft which had its first delivery to the French navy in 1999. The recent defeat in Singapore’s fighter contest was a major blow for Dassault, which had high hopes of winning against the Boeing F-15 and Typhoon. The knock-back reinforced the Rafale’s reputation as a superb fighter that cannot win away from home.

Edelstenne believes that current competitions including those in Greece and Switzerland will soon lead to the first export sale of the multirole fighter. “The aircraft is very competitive. All the pilots who fly it consider it one of the best aircraft they have flown.”

In the longer term, Edelstenne believes Dassault – in which EADS is a 46% “sleeping” shareholder – will continue to play a pivotal role in Europe’s defence industry, its technological edge ensuring its status as the leader of any future programme. He confirms that “we are candidates” to lead a project to develop a common European medium-altitude, long-endurance (MALE) unmanned air vehicle to compete with the likes of the General Atomics Predator, spinning off technologies and expertise from Neuron. That EADS has effectively abandoned its own Euromale project will not have harmed its chances.

But it is the boom in business aviation that was the biggest driver behind Dassault’s strong first-half performance, with the mainly US-based Dassault Falcon arm representing 58% of both the group’s €1.41 billion ($1.69 billion) sales during the period and €11.2 billion orderbook. The company, which competes directly with Gulfstream and Bombardier at the top end of the market, is in the throes of finalising the definition of a super mid-size aircraft, which would provide a new entry-level product to the Dassault range below the 2000EX. Edelstenne is understandably reticent about giving details. “We are beginning to talk with parties [suppliers] and will finish this process by the end of the year to launch at the beginning of next year after the certification of the 7X,” he says.

The business aviation equivalent of Dassault’s work in the unmanned arena is supersonic jets, a concept that gained currency after the demise of Air France’s and British Airways’ Concorde service. Dassault has been in talks with Alenia Aeronautica, Boeing and Russia’s Sukhoi, and Edelstenne is insistent that a workable solution will only be achieved through international co-operation – both in industrial and political terms.

He is also cautious about prospects. “If you want this aircraft to fly over land, you will need co-operation between Europe and the USA,” he says. “If it is only able to be supersonic above water, there is not a business case. We are ready to finance a programme, but we would certainly have to make a very careful business review of the cost.” Could he envisage supersonic business travel again in his career? “Whatever we did would involve five to seven years of development and I am not a 30-year-old man,” he says. “Perhaps I may participate in a decision to launch.”

Edelstenne – who is also chairman and a 6.7% shareholder in sister company Dassault Systemes, which owns the rights to the ubiquitous Catia aircraft design software – is a wealthy man in his own right. He believes neither the 81-year-old Serge Dassault, one of France’s richest industrialists, nor his family would ever contemplate merging or selling the company (Dassault’s founder Marcel Dassault resisted turning over control to the socialist government in the early 1980s under President Mitterand’s mass industrial nationalisation programme, conceding only the 46% stake that EADS still holds).

“We have a majority shareholder who is not there to make money on his shares and does not have his eye riveted all the time on the share price. We will not enter into this [merger] game because we are a technology-minded company and if we were part of a big group, we would not exist. Our technical strength would disappear. The same happened to CASA [the Spanish aerospace champion merged into EADS in 1990]. It was a very good company with good technologies, but now it is diluted within a bigger organisation,” says Edelstenne. “We are there for the long term.”