By Pierre Tran
Paris – Dassault Aviation could raise production of the Rafale to three fighter jets per month, if the aircraft company won export orders, executive chairman Eric Trappier told March 9 a news conference.
Dassault could “ramp up” to just over three Rafale per month if foreign nations opted for the French fighter, he told a news conference on 2022 financial results.
The company has been talking to subcontractors to maintain the supply chain, which was strained by the Covid crisis and war in Ukraine. But production of the fighter has kept on track, despite shortage of components, raw material, and energy.
The family-controlled company has moved to building two fighters per month, following a series of export deals, including Croatia, Egypt, Greece, India, Indonesia, and Qatar.
There are 125 foreign and French 39 orders for the Rafale, boosting the company’s order book for the fighter, with the prospect of winning more export and domestic deals.
Those foreign orders effectively kept Dassault in business in building fighter jets, as France suspended orders for the last four years, in a bid to manage the defense budget.
“Luckily we had exports,” the executive chairman said, pointing up intent to pursue foreign sales prospects. “We will look for them.”
The potential deals include the Indian navy looking to buy 26 fighters, with the Rafale competing with Boeing’s F/A-18 E/F Super Hornet. The French company is also in talks with Colombia, reported to have been close to a deal last year.
That potential higher output compares to Dassault building for years one Rafale per month, the minimum needed to keep open the Merignac aircraft factory, just outside Bordeaux, southwestern France. That led to annual production of 11 fighters, as the plant closed for a month’s holiday in August, a traditional French labor practice.
Last year the company hit a “historic high” in Rafale orders, Trappier said, with a total order for 92 fighters, comprising the United Arab Emirates ordering 80 units, Greece ordering a further six units to the Hellenic air force, and Indonesia paying a deposit for a first batch of six Rafale, with orders for 36 more fighters to confirmed with further down payments.
Indonesia has found the budget to order soon a next batch of 18 Rafale, business website La Tribune reported March 9, with the last batch of 18 to be ordered toward the end of the year or early next year. With Indonesia going to the polls next February, there is a race against the clock for the last tranche, the report said.
Dassault reported 2022 operating profit of €572 million ($605 million), with an operating profit margin of 8.3 percent of sales, compared to €527 million and operating profit margin of 7.3 percent in the previous year.
That operating profit margin was “not bad,” Trappier said, adding that there were competitors which did better.
Gulfstream, a unit of General Dynamics, posts profit in double digits as percentage of sales, an industry source said. Dassault operates its Falcon business in the U.S. out of Little Rock, Arkansas.
Dassault is in tense talks with French labor unions on an annual pay agreement, and the company seeks to keep costs under control, while making €500 bonus payments and employee profit-sharing worth a total €210 million in a bid to buy workers’ goodwill. That compared to €139 million in 2021.
The company posted 2022 net profit of €830 million, or 12 percent of sales, compared to €693 million and 9.6 percent of sales in the previous year.
New orders rose sharply last year to €20.1 billion, including export fighter deals worth €17.5 billion, orders for 64 Falcon business jets, compared to total orders of €12.1 billion in the previous year, which included 49 Rafale deals worth €9.2 billion, and 51 Falcon.
The new orders included a contract for work as lead architect in phase 1B on a technology demonstrator for a new generation fighter (NGF) in a European future combat air system (FCAS).
Dassault will in the next few weeks start work on studies on the new fighter at its Saint Cloud head office, in the suburbs of the capital. That design work will use a Dassault Systèmes computer platform, dubbed 3D Experience, Trappier said.
The new fighter contract allowed Dassault to protect its intellectual property rights, he said. Airbus had been keen to gain access to that know-how.
The 2022 new orders boosted the total order book to a high of €35 billion, compared to €20.7 billion in 2021.
Last year, sales slipped to €6.9 billion from €7.2 billion, with delivery of 14 export Rafale and one fighter to the French air force. That drop in sales reflected delivery of 25 export fighters in 2021.
The 2023 outlook is for weaker sales, with 14 Rafale to be shipped to France, and one to Greece. Dassault makes less money on fighters shipped to the French services compared to export clients, Trappier said.
The company has a large cash holding of €9.5 billion, up from €4.9 billion, due to the down payments paid by export clients.
Dassault expects France to order a 42-strong batch of Rafale as the tranche five this year, and the company will also start work on the advanced F5 version of the fighter.