Dassault's president looks across the Atlantic for technology enhancement ideas and calls for programme funding

Europe's inability to fund its own research and development programmes while committing billions of euros to the US Joint Strike Fighter (JSF) project is undermining the continent's future technological base, Charles Edelstenne, president and director-general of Dassault Aviation, is warning.

While badly needed European projects such as the Airbus A400M military freighter and the NH90 helicopter have persistently suffered delays caused by funding difficulties, he observes that Lockheed Martin has offered deliveries of the F-35 JSF in 2013 and collected "over $5 billion in development cost participation for the aircraft". This sum is 85% of the development costs of Dassault's Rafale fighter, for which the F-35 is the main competitor. "I have to admire Lockheed," Edelstenne told Flight International in an exclusive interview. "What they achieved was a stroke of genius."

Europe does have a technology- enhancement programme, the European Technology Acquisition Programme, established in 2001 by France, Germany, Italy, Spain, Sweden and the UK to develop new technologies for combat aircraft. "But there's no money to fund it," says Edelstenne, whose company is a participant. "We have a lot to learn from the Americans."

It is often argued that effective European collaboration will take time. "I accept that argument up to a point," says Edelstenne, "but if we have to wait 30 years to establish Europe's defence, this means we won't exist any more. You can't postpone the development of technology. Once you halt the flow of technological development, you're out, and you won't get in again."

As long as Europe's plans for the development of new military technology lack funding, "little by little, we'll die", Edelstenne says.

This is a challenge for Europe's politicians. "Do they want to keep this capacity in Europe?" asks Edelstenne. "If not, we'll be dependent on a single supplier [the USA]. Would that be good for Europe? I think not, and not for the USA."

At best, he warns, companies like Dassault would become mere sub-contractors to US suppliers. At worst, they could go out of the military aircraft business altogether.

In March, Dassault unveiled a 2002 net profit of c312 million ($340 million), up from c274 million in 2001. Turnover was almost stable at c3.44 billion, compared to c3.47 billion in 2001. About 75% of revenues came from Dassault's Falcon business jet division, whose 2002 turnover was c2.23 billion.

While satisfied with these results, Edelstenne adds: "One is never completely happy." He is also satisfied with the balance between military and civilian sales. Fifteen years ago, he says, the military side of the business accounted for 85% of turnover. "We made two key decisions: to invest heavily on the civilian side, and to make the company as flexible as possible."

In the short and medium terms, he says, the civilian/military balance can easily be modified, "as we could triple our revenues with the same workforce".

That Dassault is only dependent on military sales for about one quarter of revenues is no bad thing in view of French defence spending plans, says Edelstenne. "The French military budget will not increase, and we'd be very pleased if it was not reduced."

Dassault is starting industrial production of the Rafale nine years later than planned. The slippage has been "solely for budget reasons" and has been a major source of uncertainty. "Each year we were told the programme had been modified. This was a major factor behind our drive to implement greater flexibility within the company," Edelstenne says.

The French air force has ordered 234 Rafales and the navy is taking 60. Five will be produced next year, 10 in 2005 and 19 in 2006. After that, the target will be 22 a year.

As far as Eurofighter is concerned, Edelstenne is adamant that Dassault "has a better product, operationally and technically". This, he says, became clear in recent demonstrations linked to potential sales to the Netherlands and South Korea. In the Korean evaluation, "we came out number one, but lost out politically", he says. In the Netherlands, "we were a very close second to the F-35".

Unmanned aerial vehicles are at the forefront of Dassault's latest range of military products. The Petit Duc had its initial flight two years ago and a Moyen Duc is under development. Eventually, a variant could be developed as an unmanned combat aircraft, demand for which appears likely from the military, says Edelstenne. He does not think UAVs will completely replace piloted aircraft. "The requirement will probably be for a mix of piloted and unmanned craft," he says.

No major changes are envisaged in the Falcon business jet programme, in which Dassault continues to invest heavily. Sales are closely related to business cycles that lie beyond the company's control. "We had strong sales in the past year, but this is slowing," says Edelstenne. "Our hope is that demand will revive soon."

Paris is awash with speculation about possible further aerospace sector mergers and acquisitions. A merger of Dassault with either Thales or EADS, which already holds a 46% stake, are oft-mooted possibilities. Edelstenne says no deals are being seriously discussed.

UK-French and US-French relations have suffered because of France's refusal to support the war in Iraq, but Edelstenne does not think this friction will adversely affect collaboration between the French aerospace industry and its UK and US counterparts.

A more serious concern is that the UK's ever-closer ties with the USA might hinder UK industry's efforts to expand its European links. The USA, he warns, might increasingly transfer technology to the UK on condition that it was not passed on to third parties. "This is a very big question," Edelstenne says.

Source: Flight International