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in Defence / Business Aviation / Business & Finance

Dassault Aviation keeps faith with its innovative strategy

Posted 24 July 2020 · Add Comment

"Our strategy remains unchanged" - despite the effects of the crisis - "which are likely to be long-lasting as numerous economic sectors are impacted", announced Dassault Aviation CEO, Eric Trappier while presenting the 2020 half year financial report of the Group.

 

Eric Trappier at the financial briefing 

He said that the Falcon market is directly impacted as the lag in Falcon deliveries and orders leads to a lowering adjustment of Falcon production rates. He added that "a potential new Rafale Export contract is postponed". Next week a batch of Rafale fighter jets will be routed to India. Trappier underlined that the priority remains the Rafale orders and that prospection work will continue. Anuradha Deenapanray reports.

Nevertheless, there has been no cancellation of orders during this period as it was the case during the 2008 economic crisis. 

Trappier underlined that during this harsh and uncertain economic environment, the objectives of Dassault Aviation are to sell and deliver Falcons, comply with our schedule for the entry into service of the Falcon 6X in 2022 (with an early 2021 first flight), negotiate an additional batch for France of the Rafale and pursue export prospection, continue the development of the future Falcon and in the frame of multi-mission Falcon, contribute to CORAC technologies of environmental transition, bring forward the FCAS/NGF program and contribute to the MALE program.

This will be done through "high self-financed Research and Development, continuity of the Transformation Plan (digital, collaborative engineering platform and sites and adjustment of workforce to the planned workload rescheduled in accordance with our backlog".

Support to the supply chain

The unprecedented crisis which is hitting the aviation industry is also affecting the supply chain across the globe. There’s an urgent need to help this essential segment keep abreast of the situation, initiate risk mitigation plans and get prepared for challenges in the short and medium term amid the ongoing Covid-19 pandemic.

As Dassault Aviation CEO and President of GIFAS, Éric Trappier urged stakeholders to support the modernisation and digitalisation of the supply chain which is a very impacted segment of the industry globally. "It is vital to win the data and digital battle so that the supply chain stands ready to fully restart. It’s a huge challenge", he said.

To be noted that Dassault Aviation reorganised its activities during the confinement and the deconfinement to ensure employee safefy. The Business Continuity Plan focused on customer support (Armed Forces in priority), production and delivery of Rafale and Falcons, and on the development of the Falcon 6X.

Despite remote working and except for Falcon 6X and Rafale India, programs have been delayed. Covid-19 crisis has resulted in a decrease of Falcon deliveries which has led to a new forecast for 2020 of 30 jets instead of 40. 

Throughout the crisis, the Group has offered its support and assistance to its sub-contractors and suppliers. The Aeronautics Support Plan announced by the French government on June 9, was drafted in collaboration with GIFAS. There has been continuous support to the sector’s ecosystem and investment in the future, including the future “decarbonised” aircraft within the frame of the Civil Aviation Research Council (CORAC).

The Group has also contributed to the national effort in France by providing Falcons jets to transport health care personnel and medical equipment within the country and abroad. It also supported Aviation Without Borders (ASF), for repatriation and medical aid. 

In the military segment, Dassault Aviation delivered 7 Rafale Export, continued works on the F4-standard for Rafale France, delivered an upgraded ATL2, and continued to support its military customers. The first half also saw the award to Dassault Aviation, Airbus and their partners, of the initial framework contract for the launch of the Future Combat Air System (FCAS) demonstrator, specifically the New Generation Fighter (NGF).

The 6X, a top priority

In the civil segment, Dassault Aviation continued to support our customers, delivered 16 Falcons, pursued the Falcon 6X program development keeping it in line for a maiden flight in early 2021 and an entry into service in 2022, and continued the development works on the future Falcon. 

“Bringing the Falcon 6X to market on schedule is a top priority for the company. Our planning and production staff have been diligent and resourceful in adapting procedures to new sanitary guidelines to keep this program running smoothly,” had said CEO Éric Trappier earlier. “Our suppliers have also made extraordinary efforts to support us. We are grateful to them all.”

The first three pre-production aircraft that will take part in flight certification have been powered up and entered ground testing. Aircraft no. 2 and 3 are in advanced stages of assembly and long cycle parts production for serialised production has already begun. 

Electric, hydraulic and fuel system tests have been completed and testing of the Falcon 6X’s advanced digital flight control system have begun. Ground fatigue and damage tolerance testing has also been initiated. This test cycle will later be extended to include stress testing to maximum load limits and beyond. 

Trappier told Times Aerospace that the Falcon 6X sets a new industry benchmark for cabin comfort, long-range performance and flying efficiency. It offers the largest cabin cross section of any purpose-built business jet (6’6” tall by 8’6” wide) and its 5,500 nautical mile range capability allows it to connect far flung routes such as Paris to Tokyo or Los Angeles to Moscow. 

He thinks that perspectives are good for this upmarket jet. Yet, he prefers remaining cautious due to the complicated context. Concerning the Middle East market which seems to be the new focus. Dassault Aviation business jets fly in the Middle East but according to CEO Trappier the market must still grow. He also added that the North American market for long -range jets is not getting closer to saturation. It remains the largest and most vibrant market. 
Comfort, quality of service and the time factor remain priorities especially during the pandemic. This explains the fact that the business aviation sector has been less impacted than commercial aviation. 

The 2020 half year financial report 

Order intake for the first half of 2020 was 984 million euros, compared to 2,900 million for the first half of 2019. The Export order intake component stood at 80%.

The adjusted financial income for the first half of 2020 was € - 19 million euros compared to € - 26 million for the same period last year. This financial loss was due to accounting principle of the long-term military contracts’ financing component.

Adjusted net income for the first half of 2020 has reached 87 million euros, compared to 286 million during the first half of 2019. The contribution of Thales to the Group’s net income amounted to 58 million euros, compared to 141 million during the first half of 2019.

Adjusted net margin thus stood at 3.3% for the first half of 2020, compared to 9.3% for same period in 2019.

Defense programs

Defense order intake stood at 315 million euros during the first half of 2020 compared to 2,273 million during the first half of 2019.

The Defense export component amounted to 132 million euros for the first half of 2020 while it was 180 million euros for the first half of 2019.

7 Rafale were delivered to India and Qatar during the first half of 2020 compared to 10 for the same period last year.

Falcon programs

During the first half of 2020, 5 Falcon orders were made compared to 7 during the first half of 2019.

Falcon order intake represented 669 million euros in the first half of 2020 against 627 million in the first half of 2019.

16 Falcon were delivered in the first half of 2020 only one less than during the same period last year.

Falcon net sales for the first half of 2020 amounted €1,060 million, vs €986 million for the first half of2019. It should be noted that there is a positive scope effect associated with the acquisition of servicecenters acquired in 2019 and early 2020.

The “book-to-bill ratio" (order intake/net sales) is 0.37 for the first half of 2020.

 

 

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