Dassault and the 2005 Paris Air Show
Dassault and the 2005 Paris Air Show
Press conference given on the occasion
of the 46th Paris Air Show by Charles Edelstenne, Chairman and
CEO of Dassault Aviation. Source:
Dassault Aviation, Saint-Cloud, June 10, 2005.
Bruno Revellin Falcoz, Charles
Edelstenne and Loïk Segalen
Ladies and Gentlemen, Dear friends,
It is an immense pleasure to welcome you to Le Bourget, one of the foremost
events of the aerospace industry. Today, I am speaking to you in my capacity as
Chairman and CEO of Dassault Aviation and not as current Chairman of the French
aerospace industries association GIFAS. Insofar as this year's Air Show is
shorter than previous editions, I thought it would be more practical and
desirable to organize a meeting on board the Talisman ahead of the official
opening of the show.
geopolitical tensions that weighed heavily on transatlantic relations and the
global economy two years ago are behind us. On the other hand, we are starting
to feel the impact of rising oil and commodity prices. Furthermore, current
euro/dollar exchange rates are a key concern for our exports. Prospects for the
European economy are less clear. However, the United States and, to a certain
degree, Japan, have renewed with growth while China and India continue to expand
The outlook for the world economy has improved considerably since 2003. For our
industry this is reflected by the increased number of orders being won by
commercial aircraft makers. Although the cycle in military spending is affected
by different trends, we see brisk demand in defense markets, particularly for
combat aircraft, with a large number of fleets requiring replacement in coming
So what has this meant for Dassault Aviation? Thanks to our flexibility we have
emerged unscathed from the trough period of 2003 and now positioned to take
advantage of the upturn in the aerospace sector. Those of you who regularly
attend the briefings we organize on this vessel to present our financial results
every six months are familiar with our annual results for 2004. Further
information on our results is available in our Annual Report which can be
downloaded from our website, www.dassault-aviation.com.
In 2004, our financial performance benefited from the fact that our order book
was hedged at a rate of one dollar to the euro. However, the weakness of the US
dollar will continue to drag on our profitability in 2005 and beyond. We have
endeavored to hedge our future currency exposure wherever possible but the
extent of such hedging is not complete. Moreover, as regards operating
competitiveness, the dollar effect has coincided with a drop in civilian
aircraft prices which began during the recent crisis years.
In this morning's presentation, I shall not be providing an update on our
operating and financial results for the current year. I am, however, looking
forward to the opportunity to briefing you on our results for the first half of
2005 at our press conference on September 15 which I invite you to attend.
Falcon deliveries will reach between 50 and 55 units in 2005, representing a
production rate of around 5 aircraft per month. Although economic conditions
have improved measurably since 2004, this figure is slightly lower than the 63
aircraft we delivered last year. There were two reasons for this. The first was
that we received orders for just 40 Falcons in 2003. The second reason stems
from the introduction of an accelerated depreciation tax credit for customers of
business-aircraft makers in the United States. This tax break gave US companies
a key incentive to invest in new business aircraft in 2004. As a result, a
number of our customers brought forward deliveries that were initially planned
for delivery in the early part of 2005.
As regards Falcon orders, the rebound observed in the latter part of 2004 has
accelerated in recent months thanks to the momentum created by a buoyant US
economy. Although economic growth is slower in Europe, the region is
nevertheless contributing to the impetus, mainly because of the weakness of the
US dollar, the working currency for the aviation industry. Similarly, the
fractional ownership market has emerged from crisis and NetJets are poised to
place new orders.
To fill you in on the recent developments in our civil aviation programs, I
shall first highlight our new flagship, the Falcon 7X.
Jet maiden flight (François
Robineau Photo © Dassault Aviation)
Since making its maiden
flight on May 5, the latest addition to the Falcon family has logged about fifty
flight hours and all systems have performed flawlessly. The second and third
test 7Xs will enter flight preparation in July and September. A static and
fatigue test airframe has undergone the equivalent of more than 5,000 simulated
flights. Just as importantly, the 7X is a commercial as well as a technical
success, and we have already received orders for 55 aircraft. Certification and
first deliveries are expected before the end of 2006.
Allow me to add that the Falcon 7X is the first business jet to employ
Fly-by-Wire (FBW) technology. The 7X is capable of covering 5,700 nautical miles
(or around 10,500 km) and offers a maximum operating speed of Mach 0.9. In
addition to easier maintenance and significantly reduced operating costs, it
incorporates advanced aerodynamics, the new-generation EASy cockpit and a
widebody cabin which offers unprecedented levels of comfort, particularly in
terms of cabin pressurization and sound attenuation.
The Falcon 7X does much more than raise the bar in terms of performance. It has
created an entirely new standard for business jets. With the 7X program,
Dassault Aviation has pioneered a revolution in industrial design. The 7X is the
first aircraft to be designed and engineered entirely on a digital platform
using our Product Lifecycle Management (PLM) process. This unique concept is
powered by a series of software solutions developed by Dassault Systèmes: CATIA,
the world's leading virtual design solution, ENOVIA, for product data
management, and DELMIA, for manufacturing engineering. These digital tools
enable us to create a shared database which offers program actors real-time
access to the data they require for each program phase, from initial design
through to manufacturing engineering, assembly, marketing, and through-life
maintenance and support.
However, new approaches such as PLM are only part of the story. The new
industrial revolution must be accompanied by a cultural revolution within our
enterprise in order to adapt our practices to the demands of electronic
collaborative processes. Dassault Aviation is the first company to achieve such
a transformation. Much of our efforts have focused on turning the concept of
concurrent engineering from a buzzword into reality. We have not only achieved
this in our company, we have also extended it to our industrial partners,
thereby giving them the means to sustain their competitive advantage in the
This process has also given rise to another world first — our so-called "virtual
platform" — which we believe heralds an entirely new approach to collaborative
product development that promises to transform working relations between
companies and even to revolutionize the entire air transport industry.
In the meantime, we are already applying the lessons learned from PLM to the
Falcon 7X program. Thanks to this approach we no longer have to build physical
mock-ups and prototypes of airframes. Thus, the first three 7Xs are
series-produced, even if they are being used for trials and certification.
Assembly time has been cut in half from 14 months to 7. Similarly, tooling costs
are 50% lower than before and we are able to achieve flawless production quality,
right from the first aircraft. To crown this success, Boeing plans to use our
innovative approach as part of its 787 program.
The Falcon 7X has been at the forefront of attention in recent weeks. However it
has not taken the limelight from our other major development program, the Falcon
900DX, which made its first flight on May 13. The Falcon 900DX will fill an
important niche in the Falcon range between the 2000EX EASy and the 900EX EASy.
In relation to its predecessor, the Falcon 900C, the 900DX incorporates a host
of performance breakthroughs in terms of operating range, average climb rate and
take-off distance. A number of orders have already been signed, and
certification and deliveries are planned for this fall.
Concerning our EASy cockpit design, which is now in service on more than 50
Falcon 900EX and 2000EX, feedback from users confirms that our intuitive
interface is a critical breakthrough in terms of aviation safety and pilot
control. We plan to complete certification of the third version of this cockpit
design for the Falcon 900EX EASy this summer and for the Falcon 2000EX in the
As you know, over the last decade defense activities have accounted for a
marginal share of our total sales. For example, our domestic military sales have
averaged less than 20% of total sales during this period. By ensuring our
technological leadership, the Falcon range has enabled us to consolidate our
position in defense aviation. However, this situation is set to change. As I
explained earlier, demand for combat aircraft is already increasing as a new
replacement cycle begins. The 1970s generation of jet fighters is now being
withdrawn from service and we believe we can retain our historical 15% share of
this market. Rafale offers a real and viable alternative for countries which do
not wish to purchase US aircraft or which are looking for a second source of
The Rafale program has reached a level of maturity that makes it competitive on
export markets. To date, 120 aircraft have been ordered by the French air force
and the French navy's air arm.
M1 Version (Véronique Almansa Photo ©
The F1 standard (air-to-air capability) entered
operational service with the French navy's 12F squadron in Landivisiau in June
2004. The F2 standard (multirole) is currently being validated and the F3
standard (omnirole) is under development. At the end of 2004, we made the first
deliveries of an order for 48 Rafale F2s. We will achieve our target of having
the first squadron in service in the French Air Force by summer 2006. Four
two-seater Rafales have already begun initial testing at Mont-de-Marsan military
flight test center and I handed over the keys of the first single-seater for the
French Air Force to the General delegate for armaments last Friday.
The first is that the concept of an
omnirole fighter aircraft, as initially defined by the air force chiefs of
staff, is now seen as the most operationally effective and cost-effective
solution for today's environment.
The second point is that the Rafale combines
the best of French technology. Marcel Dassault might have said that the Rafale
differentiates itself by its excellence.
The third factor is that additional development costs incurred due to funding
and calendar factors were almost entirely offset by cost savings achieved in
manufacturing engineering for the series in spite of the relatively low
production rates for the Rafale program. The reduction in the acquisition cost
of the series was achieved through significant innovation efforts, internal
productivity gains and the introduction of new manufacturing processes which
were developed in-house and self-funded. Overall, the program budget was met to
within 3%. The reality of this was upheld in an inquiry by the committee on
defense spending of the French parliament. From every standpoint, the Rafale
program has set precedents in the history of military aviation.
Comparable competitor programs have encountered both financial and technological
obstacles. It is no secret that US combat aircraft programs have periodically
had cost overruns similar to those being experienced today in the JSF program.
The JSF's development has cost seven times that of the Rafale and the cost of
the series-produced aircraft is twice the projected target. Eurofighter has
faced similar difficulties, along with technical and scheduling issues, and its
development costs are now three times greater than those of Rafale.
Rafale is a multirole jet fighter that comprehensively meets the needs of the
French armed forces and is set to replace seven types of aircraft currently used
by the Air Force and Navy. The end-result represents a major leap in terms of
efficiency, together with optimized costs and increased savings.
As regards export sales of the Rafale, negotiations are in an advanced stage
with a number of countries. As you know, I cannot comment about negotiations in
Mirage 2000-9 over the UAE (Dassault Aviation Photo)
The Bader 21 contract with the United Arab
Emirates is in the final stages of completion. We have delivered 30 of the 32
new aircraft ordered. The last two aircraft concern the Mirage 2000-9 Mk2.
Retrofits to the UAE's existing Mirage 2000 fleet are well underway, with 15 of
the 30 scheduled retrofits already completed. We are also in the process of
completing an order for the Hellenic Air Force of Greece for the acquisition of
15 Mirage 2000-5 Mk2 and the upgrading of 10 Mirage 2000 to the same standard.
Finally, all 10 of the Mirage 2000H ordered by the Indian Air Force were
delivered at the beginning of this year.
Firstly, allow me
to say that the combat aircraft industry has always been a high-technology
industry and therefore of key importance to national sovereignty. It helps to
secure independence of decision-making and freedom of action. Our industry is
also central to foreign policy and trade. It represents a major engine of growth
for the economy, both through technology spin-offs it generates and employment
it creates for other sectors of industry. Consistent investment in R&D and the
experience acquired and consolidated from over one hundred programs in sixty
years have placed Dassault Aviation in a class of its own in Europe while
ensuring our independence. Our capabilities are backed by technological
proficiency and unrivalled expertise in the development of military aircraft
systems. We are committed to preserving these capabilities for the long term.
Our concern is shared by other European countries possessing aerospace
industries of their own. To respond to this challenge, at the 2003 Paris Air
Show, the French government announced an initiative to develop a unmanned combat
air vehicle (UCAV) demonstrator as part of a project open to European
cooperation. This UCAV demonstrator is code-named Neuron and will be as large as
a combat fighter. It satisfies a twofold objective which the French Defense
Ministry has identified as strategic for the future of the combat aircraft
industry in Europe:
The NEURON (Dassault Aviation Photo).
- Firstly, the program marks a major initiative to maintain and develop
expertise in these critical technologies for combat aviation in Europe;
- Secondly, as a test-bed for European cooperation in a highly innovative area,
Neuron will bring together design and engineering firms with a complementary
range of expertise and skills.
The French Defense Ministry was keen to introduce a new approach, by developing
a French initiative open to European cooperation which would feature Dassault
Aviation as a prime contractor and incorporate leading European industrial firms
that receive support from their governments according to their ability to
optimize program development. This approach has been enthusiastically received
by European design and engineering firms which see the French authorities'
commitment as a guarantee of the project's future success. Indeed, each major
European success story in aeronautics or space flight has involved France as the
main pillar and driving force.
Industrial contracts have been signed with Saab, Alenia,
EADS Casa, HAI and Ruag. Inter-governmental agreements are being finalized. Our
shared ambition is to for the new consortium to break new ground in terms of
collaboration for the piloted and unmanned air vehicles of the future.
Remaining on the subject of drones, allow me to say a few words about the
agreement with EADS we announced last year at Eurosatory. Under this
groundbreaking agreement, Dassault Aviation takes on the role of prime
contractor and will work alongside EADS for UCAVs while EADS will act as prime
contractor and Dassault Aviation as associate contractor for reconnaissance
UAVs. Finally, for the Euromale UAV program, Dassault Aviation is taking
responsibility for the flight segment and system architecture.
Before concluding, allow me to mention that products are only as good as the
service and maintenance that support them. In the field of service support for
the Falcon range, we have launched a comprehensive, nose-to-tail service support
plan, based on a fixed cost per hour schedule, for each new Falcon aircraft.
This program, which we have entitled "Falcon Care", is being marketed as a
six-year renewable support program which includes parts and labor, on-site
technical assistance and service bulletins.
As regards support services for military aircraft, last year we signed a
through-life management contract for in-service aircraft repairs for the French
Air Force. A similar contract was signed for the first 37 series-production
Rafales a few months ago. We continue to develop our services in areas such as
integrated testability, remote maintenance, electronic documentation, training,
logistics, online parts reordering, mission preparation and retrieval units.
Our static displays include the Falcon 900EX, the Falcon 2000EX, the Rafale C, the
Rafale M and the Mirage 2000-5 AAF. At center-stage will be two new products:
the Falcon 7X, which will have top billing, and a life-size prototype of the
nEUROn UCAV which will be unveiled on Monday, June 13. Flight demonstrations of
the Falcon 7X will take place Monday and Saturday. We are running aerial
displays of the Rafale and Mirage 2000-5 on each day of the show at around 2.00
pm and 1.50 pm, respectively. As always, you are welcome to visit our booth
where we will be presenting mock-ups, videos and virtual reality simulations.
Finally, we will hold a press conference at 4 pm on Monday, June 13 to announce
the details of our partnership with Bertrand Piccard for his solar-powered
My conclusion will not come as a surprise to you since it has been the common
thread behind each the examples of our activities I have given you today. The
winning company of the 21st century will not only be digital and flexible, but
also capable of building variable geometry coalitions, federating skills and
competencies, and integrating the latest advances in information technology and
telecommunications. Our sights are set firmly on the future. Our pioneering
spirit is reflected in our current development programs, such as Falcon 7X, as
well as in our systems of tomorrow, with Neuron. Make no mistake, Dassault
Aviation will always be at the cutting-edge of innovation.
Thank you for joining us today. I shall now open the floor for your questions.