AEROSPATIALE CUT its losses radically in 1994, but warns that further progress could be threatened by the collapse of the US dollar.

The French group's net loss shrank to Fr483 million ($92 million), marking a significant turnaround on the performance of the past two years. Losses had soared to Fr2.4 billion in 1992 and were still running at Fr1.4 billion in 1993.

The improvement came despite the cost of restructuring and the loss of Fr300 million because of weakness in the dollar. Chairman Louis Gallois highlights worsening dollar values as "by far the most important" factor affecting the group's continued recovery. The dollar was averaging nearly Fr5.7 in 1993 but is now down to little more than Fr5.

Gallois also raises concerns over the volume of new orders being taken by the group. Although order intake grew marginally to just under Fr30 billion, Gallois says that the level remain "insufficient" to sustain group turnover, which ran at nearly Fr49 billion last year.

Sales were down by 3% on the year, primarily because of depressed helicopter and regional-aircraft markets. Missile sales were stable, while space and defence was the only business sector to show significant growth.

Aerospatiale says that it will continue to press ahead with efforts to improve efficiency and has already put cash aside for restructuring of production sites and workforce cuts planned for 1995 and 1996.

Efforts to reduce cycle time and inventories helped the group to free Fr3.2 billion of cash, which was used to pay off debt in 1994. Overall, Aerospatiale trimmed its net debt back by Fr5.7 billion, to less than Fr8 billion, thanks mainly to a Fr2 billion injection of capital from its French Government owner.

Source: Flight International