By Pierre Tran
Paris – The background to sales of the Rafale fighter and Falcon business jets was “uncertainty” due to general elections in Europe and France, and president Joe Biden standing down in the U.S. election campaign, Dassault Aviation executive chairman Eric Trappier said July 23.
There was “concern” on this uncertainty in France, as it was not clear over “the next few weeks” what kind of government would be formed, he told a news conference on first-half financial results. It would probably be in September a new government emerged, he said.
Meanwhile, Biden’s announcement he will not stand for a second term meant there would be “a certain ‘happening’ in the next few months,” he said.
The U.S. accounts for a major part of the sales of the Falcon, with the company’s North American office operating out of Little Rock, Arkansas. Falcon sales rose to €980 million in the first half, up from €827 million a year ago.
Trappier said he has placed a top priority on building the Rafale twin-engine fighter, following a special request from the French president, Emmanuel Macron.
“In France, the president of the Republic, as head of the armed forces, wrote to defense manufacturers urging them to step up their efforts in the context of a war economy,” the chief executive said. “In response to this call, I instructed Dassault Aviation employees to prioritize Rafale production, both for France and for export.”
There was also war in Ukraine and a state of war in the Middle East, in the market background, he said.
Macron told July 23 France 2 national television there would effectively be a political suspension for the next few weeks, as Paris played host to the Olympic Games, which will open on Friday and run to Aug. 11.
“Until mid-August, we’re in no position to change things, because it would create disorder,” the French head of state said.
Macron was replying to the leftist-green coalition New Popular Front proposing a senior civil servant, Lucie Castets as the next prime minister in the new government, when Gabriel Attal stepped down from his caretaker post at Matignon.
It was not a case of deciding on a name for the prime minister’s office, but forging a coalition majority in the lower house National Assembly, Macron said.
In the meantime, French companies were in deep uncertainty on what kind of government to expect, unclear as to future government measures, the changes in law, tax, and standards, Trappier said, adding that he was putting on his hat as chair of UIMM, an employers association for the metals industry.
Some 90 percent of the trade body were small and medium companies, and highly concerned, as were investors, particularly foreign backers, he said.
The New Popular Front won a narrow majority of 182 parliamentary seats in the July 7 parliamentary election, followed by Macron’s centrist Ensemble with 168, and the far-right National Rally, previously named National Front, trailing in third place with 143 seats.
That lack of absolute majority left the political parties struggling to form a coalition. Macron was staying on as president, expected to struggle with a fragile administration of coalition partners. While other European countries have wide experience of coalition governments, France has since the constitution of the Fifth Republic in 1958 usually been led by a single party in power, with a president of the same alignment.
Supply Chain Woes
Meanwhile, Dassault was doing what it could to help small and medium companies struggling with serious problems in its supply chain, Trappier said, and the prime contractor was ready to sign fresh Rafale deals.
Subcontractors of the fuselage aerostructure were in difficulty, and the company was sending its staff to help suppliers, and was making advance payment to ease their financial problems.
That supply problem was common to the aircraft industry, with the European airliner builder Airbus forced to scale back production targets, having overtaken Boeing in a market dominated by the two companies.
Despite that struggle with the supply chain, the company was doing everything it could to deliver on time, and was ready to win new fighter deals, the chief executive said.
“I am fairly optimistic on our capacity to deliver,” he said. “And I am ready to sign new contracts for the Rafale.”
Dassault was continuing talks with Serbia and Colombia, he said on the sidelines of the news conference. Saudi Arabia has previously indicated interest in the Rafale, as an alternative to the Eurofighter, which had been blocked by Germany. Berlin has since approved a sale.
The company delivered 13 Rafales last year, short of the planned 15, with that shortfall due to problems in the supply chain.
Tempest Doubts
Elsewhere in Europe, British prime minister Keir Starmer opened July 22 the Farnborough air show, and pointed up the significance of the global combat air programme (GCAP), but could not guarantee the new fighter project would go ahead.
That was in the hands of George Robertson, a former defense minister and ex-Nato secretary general, who was conducting a defense review, due to be completed the first half of next year.
British electors returned three weeks ago a center-left Labour government with an unprecedented 410 parliamentary seats, trouncing the Conservative party, which lost some 250 seats and was now the loyal opposition in a 650-seat parliament.
That decisive change of government led to the launch of a wide-ranging defense review, which cast doubt on whether there would be political support for the GCAP, based on the Tempest new generation fighter, partnered with Italy and Japan.
Trappier said he had seen the model of the Tempest on display at Farnborough, and was aware of the efforts to promote the fighter project in the light “of a certain reserve” on whether the fighter project would advance or not.
On the European future combat air system (FCAS), he said studies in phase 1B were under way, and there was preparation for deciding on work share, namely “who does what,’ on a technology demonstrator. Work on building the demonstrator was due to start in 2026.
Dassault is prime contractor on the new generation fighter (NGF) at the heart of FCAS, partnered with Germany and Spain. Belgium has signed up as observer, looking for a place at the industrial partnership table.
Profit Rise
Dassault reported a rise in first-half adjusted operating profit to €170 million from €151 million a year ago, with adjusted net profit rising to €442 million from €405 million.
The latter was a net profit margin of 17.4 percent of sales, down from 17.6 percent.
Adjusted sales rose to €2.5 billion from €2.3 billion, while orders climbed to €5.1 billion from €1.7 billion.
The cash holding rose to €8.8 billion from €7.3 billion, while the value of the order book rose to €41.2 billion, with 223 Rafales and 83 Falcons, compared to €38.5 billion, with 211 Rafales and 84 Falcons.
An order for an 18-strong batch of Rafales for Indonesia came into effect in January, which was the third and last order from Jakarta, bringing the total order to 42.
The company delivered six Rafales to France, leaving a remaining batch of 14 fighters to be shipped for the French air force in the second half.
The book-to-bill ratio, or orders to sales, was at two in the first half.
The company has received a total of 495 Rafales to date. The engineers were working on development of the F4 standard, while preparing for the F5 model, which will fly with a combat drone loyal wingman.