During a 2012 that opened with its Rafale winning India's long-contested fighter competition, Dassault Aviation enjoyed rising fortunes on both the military and business jet sides of the operation. Sales rose 19% to €3.94 billion ($5.12 billion) and operating profit gained 45% to €547 million on higher sales and better currency hedging.
But while Rafale deliveries held steady at 11 units and negotiations between France and India continue over an export deal that could add 126 aircraft to the orderbook, the most encouraging result from Dassault in 2012 was probably the continued recovery of its Falcon division, which was hit by the business jet market collapse during the 2008-2009 financial crisis. Sales rose nearly 16% to €2.8 billion and orders jumped to 58 jets in 2012, from 36 in 2011, following a net negative nine orders in 2010 and negative 163 in 2009. The scale of that market collapse is evident in Dassault's 2008 Falcon order count of 115.
Speaking in Paris, newly appointed chairman and chief executive Eric Trappier - who replaces the retiring Charles Edelstenne - said of business jets: "The uncertain evolution of the world economy and, in particular, of our historical markets, the United States and western Europe, encourages us to remain vigilant." He adds that the weakness of the US dollar "remains a strong and not easily controllable constraint because of the spasms of the international financial system".
Dassault's financial situation remains solid, though. A sharp fall in borrowing costs during 2012 and increased contribution from its 26% holding in the recovering Thales helped lift net income 58% to €510 million. Although the backlog dropped 9% to €7.99 billion, orders rose 16% to €3.33 billion, with Falcon obligations more than offsetting a decline on the defence side - although, for Dassault, military business prospects are attractive.
Rafale deliveries in 2013 will remain steady at 11, and that programme will get a huge shot in the arm when the India deal is finalised. In any case, adds Trappier, Dassault remains "mobilised" to deliver the aircraft.
Significantly, other highlights of 2012 included the first flight of Dassault's Neuron stealth unmanned combat air vehicle. Thales is the prime contractor for the UK's Watchkeeper tactical UAV, and the French and UK defence ministries look to be heading towards the launch of a Future Combat Air System demonstrator programme that would ally Dassault with BAE Systems.
CONVALESCENCE
For Falcon in 2013, Trappier says Dassault is hopeful of a recovery in the "convalescent" business jet market, particularly in the USA.
Deliveries are expected to reach 70 units, up from 66 last year and 63 in 2011 - although still far short of the 95 Falcons handed over in 2010. The 2012 establishment of a Falcon aircraft services business in China improves Dassault's footprint in another key market and there is good news on the product front. So far this year, the entry-level 2000S, promising large-cabin comfort in a super-midsize aircraft, and the longer-range 2000LXS have been EASA certificated; FAA approval should follow shortly. The first S delivery is scheduled for the second quarter of 2013, and the LXS will replace the LX by year-end.
But while the orderbook took a hit in the financial crisis, Dassault arguably suffered little. The downturn hammered the light business jet market - witness Hawker Beechcraft's demise - but midsize and large-cabin sales recovered fairly quickly, and that is where Dassault sits.
The big question facing Dassault concerns the competition. Its flagship, the three-engined 7X, is under threat from a new class of bigger, faster, longer-range rivals. Bombardier's Global 7000 and 8000, and Gulfstream's G650, will soon enough leave the 7X's 5,950nm (11,000km) range far behind; the 8000 will link Los Angeles and Sydney (7,900nm) and the G650 will cover 7,000nm at just shy of Mach speed.
Dassault has talked for several years of launching a new "SMS" model, which has been assumed to mean super-midsize. But to cut the legs off its own, popular Falcon 2000 range seems an unlikely strategy.
Not a peep is heard from Dassault, but expectations are rising that behind the curtain lies an ultra-long-range rival for the ultra-high-net-worth customers who increasingly drive this most esoteric of markets.
Source: Flight International
