Dassault will begin furloughing workers at its French factories in September as it grapples with a collapse in demand for business jets that has left it with a net order deficit of €1.13 billion ($1.6 billion) in the first six months of the year.
Although the company, which published its half-year results on 22 July, will not disclose precise order figures, or how they split between its defence and Falcon business jet activities, it admits that Falcon cancellations have caused the negative figure.
Propects for the Rafale fighter have been boosted by French president Nikolas Sarkozy
The privately owned manufacturer, which has already shed around 150 of its 2,400-strong workforce at its US completions and delivery facility at Little Rock, will tell workers at some of its French plants to stay home between 3.5 and eight days a month, although some factories, including Bordeaux, are unaffected. French state payments mean employees will lose only 2-3% of their monthly take-home pay, in marked contrast to the USA, where there is little official compensation for furloughed workers.
Dassault delivered 26 Falcons in the first half of the year and expects to finish 2009 with around 80 deliveries, up from 72 last year, the result of momentum from the strong orderbook built up during the sector's breakneck years of 2005-7.
Things look better for Dassault on the defence side where competitions in Brazil, the United Arab Emirates and, in the longer term, India, have boosted prospects of an export breakthrough for the Rafale fighter.
The company's acquisition of Alcatel-Lucent's 20% shareholding in Rafale's avionics and radar supplier Thales - with 25.9% Dassault is now the biggest single shareholder alongside the French state - could give it an edge in these contests. The French government is more relaxed about the transfer of technology to these countries than the USA and this could meet their requirement to use a fighter deal to develop their domestic aerospace industries.
Dassault chief executive Charles Edelstenne says the partial merger with Thales will help both companies compete more effectively. "We are used to working with them but now we are much closer. We exchange information more than before," he says. "It will all reduce costs and make us more competitive on the market."
But he rules out a full union with Thales, pointing out that "60% of mergers are failures". He adds: "Why should I take the risk? We have our culture and they theirs. Too often with mergers people spend more time worrying about whether they will be in the same chair tomorrow than concentrating their energies on the product or customer."
Edelstenne also pays tribute to French president Nikolas Sarkozy, who he says is the company's top salesman. "Before Sarkozy, how many [Rafale] prospects did we have? Since his election, he has decided to help France export goods and taken leadership on the export of the Rafale. He understands that the French economy cannot depend on demand at home alone."
Dassault's results show consolidated net profit of €118 million for the first half of 2009 on revenues of €1.38 billion, 70% of which was exports.