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.

By Pierre Tran

Paris – Arquus, a builder of light and medium armored vehicles, expects to increase 2020 sales by 10 percent, down from a 38 percent rise in 2019, said chairman and chief executive Emmanuel Levacher.

That “ballistic” trajectory of a forecast dip in sales offers an “opportunity to stabilize activities,” after a sales increase of 72.5 percent over the last two years, he told a news conference.

Arquus built 2,200 vehicles last year, up 47 percent from a year ago, calling 2019 a record year for the company.

The company expects to hit its profit target this year, he said.

Arquus does not publish sales or profit figures, which are reported by the parent company, Volvo, a Swedish truck maker.

Last year’s sales for Arquus were worth some €600 million ($652 million), an industry source said.

Arquus consists of the French brands Acmat, Panhard and Renault Trucks Defense and was formed after the 2018 reorganization of Volvo Group Governmental Sales, a unit of the Volvo company.

Arquus last year booked orders worth €750 million, stable on the previous year. When options of orders in the French Army’s Scorpion modernization program are included, the figure rises to €1.2 billion.

The latter amount gives a book-to-bill, or orders to sales, ratio of 1.

Arquus will receive €240 million in the Belgian order for French armored vehicles in the motorized capability program dubbed Camo, he said.

That Belgian order, worth €1.1 billion, is a government-to-government deal drawing on the Jaguar combat and reconnaissance vehicle and Griffon multi-role troop carrier being built under the French army’s Scorpion modernization program.

Arquus receives 40 percent of value for its work on the Griffon, and some five to 10 percent on the Jaguar, he said. The smaller amount on the latter reflects the high amount spent on weapons on the combat vehicle.

Arquus works with Nexter and Thales in a partnership on the Scorpion program, with the former supplying the remote-controlled machine gun and driveline on the Jaguar.

One of Arquus’s efforts to boost orders lies in a US licensing agreement for its  Bastion troop transport, signed with AM General, the company which builds the humvee vehicle, he said.

That license allows AM General to offer the Bastion in prospective export deals, when the US government buys equipment and sells to client nations under foreign military sales rules.

The success of that license deal requires AM General to win the competition, he said.

Arquus is working on a technology demonstrator dubbed Scarabée, a vehicle which carries the company’s hopes to be the French army’s replacement for the véhicule blindé leger (VBL), a scout car.

There are also expectations of export sales on the Scarabée, which will be commercially launched at the Eurosatory trade show for land weapons, which runs June 8-12. The potential clients are those nations which operate the VBL.

The planned VBL replacement is named véhicule blindé d’aide à l’engagement (VBAE), and is in a later phase of the Scorpion program. The present military budget law, which runs to 2025, does not include funding for development and production of the VBAE.

By Jimmy Bhatia

New Delhi: After hard-nosed price negotiations spreading into better parts of two years, HAL has finally agreed to supply Indian Air Force (IAF) with 83 Tejas LCA Mk IA at a cost of Rs 39,000 crore ($5.6 billion approximately).

Earlier, HAL had demanded a staggering Rs 56, 500 crore ($8.1 billion) as the overall cost for the same project. The defence ministry and IAF were initially taken aback at the “exorbitant price” being demanded by HAL to produce the 83 Tejas Mk-1A jets along with the maintenance and infrastructure package.

It may be recalled that in November 2016, the Defence acquisition Council (DAC) had approved the procurement of 83 Tejas Mk-IA jets at a cost of Rs 49,797 crore, but HAL had responded with a quote of around Rs 56,500 crore. This led to a detailed analysis on how the pricing was being done. It was revealed that HAL was also charging profit on imported components. By carrying out item by item scrutiny cost was brought down. The IAF also cut down some of its support requirements to cut costs.

With the contract price now settled at Rs 39,000 crore, the procurement file is being sent to the Cabinet Committee on Security for the final nod. It should be cleared before the end of the current fiscal year, March 31.

In 2016, while offering the Tejas Mk-IA with some much needed improvements, such as, an AESA (active electronically scanned array) radar to replace existing mechanically-steered radar, air-to-air refuelling, long-range BVR (beyond visual range) missiles and advanced electronic warfare to jam enemy radars and missiles, HAL had promised to start inducting the Mk- IA into the IAF by 2019. HAL had also assured IAF that it would improve the maintainability aspects of the jet to ensure better operational availability on the flight-line. However, three precious years have been lost in the bureaucratic quagmire of price negotiations.

Now, once the contract is inked, HAL promises to begin deliveries of the Mark- 1A jets in three years,” said a source. It is hoped that there will be no further slippages in the timelines, as the IAF down to less than 30 fighter squadrons, had pinned its hopes on timely Tejas induction as one of the three pillars for new fighter acquisitions – the other two being induction of Rafale fighters and going ahead with MMRCA-II programme for the acquisition of 114 new jets – to stem any further slide down in its fighter squadrons’ strength and gradually build the strength to 42 jet fighter squadrons required for the requisite deterrence against a dual threat from Pakistan and China.

Notably, the first four Rafale fighters will touch down at Ambala airbase only in May this year, with the remaining 32 following in batches by April 2022 under the Rs 59,000 crore deal inked with France in September 2016.

On the other hand, the perennially slow production rate of the home-grown Tejas jets by HAL, much like its protracted development saga, remains a major concern for the IAF. For example, IAF’s No. 45 ‘Flying Daggers’ squadron at Sulur has till now inducted only 16 of the original – with the earmarked second squadron No. 18 ‘Flying Bullets’ yet to receive anything – out of the original 40 Tejas Mark-1 fighters, which were all slated for delivery by December 2016 under two contracts worth Rs 8,802 crore inked earlier.

The flight testing for Tejas Mark-1A will hopefully be completed by 2022, but the induction of all Mk Is/Mk-IAs would not be complete before 2025/26. After these 123 fighters, the IAF is also looking to induct 170 Tejas Mark-2 or the MWF (medium weight fighters) with more powerful engines and advanced avionics,” another source said.

But the Tejas Mark-2 and the indigenous stealth fifth generation fighter aircraft called the advanced medium combat aircraft (AMCA) are not likely to be available before the IAF celebrates its centenary.

This article was first published by our partner India Strategic on February 17, 2020.