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Dassault cuts production by 50%

Dassault Aviation SA, builder of the Falcon business jets and the Rafale and Mirage fighter planes, is cutting production of corporate aircraft by as much as 50 percent because of stagnating economic growth in the US and Europe.

The planemaker is scaling back Falcon production to four aircraft a month this year from six a month last year because pf falling demand in the US, its primary market, said chief executive officer Charles Edelstenne.

"The environment is still filled with uncertainty and questions," Edelstenne told journalists at a press conference at the Paris Air Show yesterday. He said the current market was characterized by a general "economic crisis" worldwide.

Dassault Aviation has been relying since 1998 on sales of Falcons to compensate for lower revenue from combat jets. Deliveries begin this year on a US$3.2 billion Mirage order from the Unite Arab Emirates.

Last year Dassault delivered 66 Falcon jets compared with 75 in 2001. Falcons contributed 65 percent of Dassault's sales last year.

Sales of the planes have been driven by orders from fractional, or shared, ownership companies including Warren Buffett's NetJets Inc.

Dassault holds about half the corporate-aircraft market.

Edelstenne said that about 20 Falcons have been ordered since January and that he expected to deliver around 50 planes last year.

Less than 5 percent of the company's stock is traded. European Aeronautic Defense & Space Co owns 45.8 percent of the Shares, while the founder's family, through Groupe Industriel Marcel Dassault, owns 49.9 percent.

On the military side, Edelstenne said that Dassault had to contend with "American political might" worldwide in trying to find export markets for the company's Rafale fighter jet.

Edelstenne said Dassault is talking to Singapore about a Rafale order.

The island state wants to replace a squadron of aging A-4SU Super Skyhawks and has requested information from potential bidders.

The order may be worth between US$1 billion and US$1.5 billion, according to Singapore press reports.

Edelstenne declined to comment on whether Dassault would be able to offer the Rafales with advanced radar that isn't currently on planes being produced for the French government. He said an export version of the aircraft would be ready by 2005 or 2006, after having been delayed by a lack of government funding.

France has said it plans to buy 294 Rafales. So far it has placed orders for 61 aircraft. Dassault is negotiating for an additional order of 59 planes which should be completed this year, he said.

Dassault expects to deliver one Rafale to the French military this year, five next year, nine in 2005 and 19 in 2006 with about 22 deliveries a year planned over the following decade.

Edelstenne also said Dassault remains committed to the market for drones or unmanned aerial vehicles. Dassault produced and test- flew its first drone, called "le petit duc," or "little eagle" in July 2000.

A more advanced version, the "medium-sized eagle," will fly at the beginning of next year. Dassault has formed a joint venture with French company Sagem to work on drones and said other companies might join the project.
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