By Pierre Tran
Paris. Dassault Aviation is backing its industrial partner Airbus in budget negotiations for a planned European medium-altitude, long-endurance drone, Eric Trappier, chairman and chief executive of the aircraft builder, said Feb. 27.
“It is Airbus which leads the negotiations,” he told a news conference on 2019 financial results. Those talks relate to analysis and mitigation of risk on an unmanned aerial vehicle.
Dassault “will provide support for Airbus,” he said.
Airbus is due to make a March 2 detailed presentation to the French ministry of the armed forces, setting out the case for a budget in the order of €7.1 or €7.2 billion ($7.7-$7.8 billion), explaining how the company reached the figure, an industry source said.
Dassault will attend that meeting in a support role, a second source said.
Industry had previously sought a budget of €8-10 billion, higher than the four client nations had deemed to be acceptable.
Airbus is prime contractor on the UAV project, with Dassault and Leonardo of Italy as partners. France, Germany, Italy and Spain are the client nations, with European procurement agency Occar managing the project on their behalf.
Industry seeks to explain to the government the need to factor in provision for risk, as the program is complex and might turn out to be more expensive, take longer and need know-how not readily available, the first source said.
The government wants to set a budget and stick to it, while industry seeks to include provision to cover the “just in case” bases.
A parliamentary source said, “there is some doubt,” on the European UAV project in view of cost and lengthy development, while there is “an immediate operational requirement.”
Airbus declined comment.
The procurement office, Direction Générale de l’Armement, was not immediately available.
There is a view in Airbus that the support from Dassault is highly valued and reflects a close cooperation between the two companies.
That link is seen to be unusual in the light of past record, in which the two firms kept distance from each other.
For Dassault, the UAV project posed the question either cooperation between two companies, or one company striking a lone path with little prospect of reward.
Industry sees the risk of governments opting for the General Atomics MQ-9B SkyGuardian, an upgrade to the Reaper, rather than launching a European program.
France set a maximum budget of €7.1 billion for development and production of 21 systems, comprising 63 UAV units, financial website La Tribune reported, drawing on sources who spoke to the financial website in November.
“It is to be hoped that this dossier is favorably concluded, as the European MALE UAV is intended, in a future version, to be part of FCAS,” French senators Cédric Perrin and Hélène Conway-Mouret said Nov. 21 in a parliamentary report on the 2020 defense budget.
France estimates €8 billion to be spent by 2030 on development of a Future Combat Air System, AFP has reported, based on a briefing by the private office of the armed forces minister.
On export prospects for the Rafale, Finland and Switzerland are expected to decide next year which fighter jet to pick, Trappier said.
There are talks in India with the air force and navy, and there are other sale prospects, which he declined to disclose.
In Finland, Boeing F/A-18, Dassault Rafale, Eurofighter Typhoon, Lockheed Martin F-35 Lightning, and Saab Gripen are in competition.
In Switzerland, those fighters are in a tender, except for the Gripen.
Dassault reported 2019 adjusted net profit of €814 million, up 20 percent from a year ago, on sales of €7.3 billion, up 44 percent. The net profit margin was 11.1 percent of sales, compared to 10.8 percent on a comparable basis.
Dassault expects profit margins to fall, reflecting increased research and development on its Falcon business jet. The company plans to announce this year launch of a new version of the Falcon, which competes with Gulfstream and Bombardier.
The company spent €527 million of own funds on R&D, up from €392 million, reflecting work on its Falcon 6X, due to enter service in 2022.
Orders rose to €5.9 billion from €5 billion, with defense orders accounting for €3.4 billion.
The order book fell to €17.8 billion from €19.4 billion.
Dassault delivered 26 Rafales to export clients, and none to France.
The company expects to ship 13 Rafales to foreign clients this year, and resume deliveries of the fighter jet to France in 2022.
There remains the fifth batch of Rafale orders to be placed in the multi-year budget law, with their deliveries due in 2027.
The featured photo shows Éric Trappier, Chairman and CEO of Dassault Aviation, presenting 2019 annual results on February 27, 2020.
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