Interview with Éric Trappier, Chairman and Chief Executive Officer of Dassault Aviation.
Our successes are built on a singular legacy and culture, anchored in a deep passion for aeronautics, a mindset of continuous innovation, great perseverance and an ongoing focus on customer satisfaction.
In 2015 and 2016, the Rafale seems to be omnipresent, in military operations and in the marketplace.
Absolutely. Since the dramatic attacks in November 2015, France is at war. Aircraft deployed by the French air force and navy are flying daily missions in Syria and Iraq, along with our allies, to fight terrorism. In this struggle against the Islamic State – like every time that France is engaged on the military front – we are working alongside our armed forces to provide the support they need for all operations. Under these extremely demanding conditions, our Rafale Care solution has largely proven its effectiveness. Our customers in Egypt, Qatar and the United Arab Emirates are also counting on us because the Middle East is experiencing a number of upheavals. We are of course doing our utmost in this struggle, as shown by our delivery of the first three Egyptian Rafales and all associated support services in just five months. This impressive responsiveness is one of our company’s hallmarks. Our support services, whether in the civil or military sector, are the foundations of our relations with the users of our aircraft.
The Rafale has also been a business success. With the contracts from Egypt and Qatar, our omnirole fighter has begun to enjoy the success it deserves in export markets – and there’s no reason for it not to continue along this path. Negotiations with India are very advanced as well. In general, the dozen countries that operate the Mirage 2000 are natural candidates to acquire the Rafale. We also have possibilities in Malaysia, Belgium and Canada, to name just the most familiar prospects.
Given this outlook, will you be changing your production rates ?
The Egyptian and Qatari contracts alone do not justify an accelerated rate, since they in fact precisely compensate for the deliveries scheduled in France, which the government has now decided to postpone after 2020. However, any new contract will be added to the volume for the Egyptian and Qatari orders, as well as post-2020 orders from France. So it is inevitable for us to significantly increase the production rate. But any change like this takes time. If we want to meet our commitments, we have to plan ahead. That’s why I decided last summer to start to take the measures needed to raise our production rate to three Rafales per month in 2018, versus one per month previously. In particular, we’re going to have to hire a number of people over the entire Rafale “ecosystem”. Each of the 500 companies concerned will act according to its overall workload. At Dassault Aviation, we already added about 250 new employees in 2015.
Of course, this ramp-up must be gradual. Winning the Indian contract would confirm a rise to two / month, a rate we are now approaching. We will need a fourth contract to confirm an increase to three per month. We now have the momentum, but to realize our potential we have to sign new export contracts.
The nEUROn program is coming to an end. What conclusions can you draw? And is a follow-on planned ?
The nEUROn performed over 120 flights in three years, including one hundred in France and the remainder in Italy and Sweden. Both the aircraft and its associated facilities logged exemplary reliability and availability. The initial tests were designed to open its flight envelope, test its optronic sensor and assess the performance of its datalink. Most flights during the second phase were dedicated to comparing signatures and detectability in the infrared and electromagnetic bands, against operational systems from France, Italy and Sweden. A weapon release test was also performed recently, with success.
The data generated and lessons learned are in line with what we expected, and will provide a baseline for future combat drones. It’s also worth noting that we stayed within the budget. This successful program shows Dassault Aviation’s capabilities in strategic technologies and as prime contractor, including the ability to coordinate a joint European program. Given the nEUROn’s reliability and potential, an additional series of tests in France has been proposed by the end of the year.
Looking past nEUROn, what are you working on ?
The next step is already under way: on November 5, 2014, Dassault Aviation and BAE Systems, along with their industry partners, won a contract from the French and British governments to carry out a joint feasibility study over a period of two years, within the scope of the Future Air Combat System (FACS) program. The general goal is to work together to analyze the requirements for the unmanned component of a combat system that would complement the aircraft now in service. Following this study, a demonstrator development program will be launched as a follow-on to nEUROn and Britain’s Taranis, which were primarily technology development platforms. At the French-British summit meeting in Amiens on March 3, 2016, the authorities from both countries confirmed their commitment to launching a demonstration program in 2017, with a budget of 2 billion euros.
Our R&D efforts could also benefit from Europe’s MALE 2020 program for a medium-altitude, long-endurance observation drone, when it is officially launched by the French, German, Italian and Spanish governments. In fact, at the end of 2015, the Spanish defense ministry asked to join discussions between other defense ministers and OCCAR, the Organization for Joint Armament Cooperation, within the scope of preparations for this study. Dassault Aviation, Airbus Defence & Space and Finmeccanica teamed up on the preliminary definition of a MALE drone, which will be staking out a position as a more modern competitor to the American Reaper. Official announcement of a program go-ahead is hoped for in mid-2016.
How about Falcon market trends ?
With 90 Falcons sold in 2014, we could have thought that the crisis that kicked off in 2008 had finally come to an end. But our sales were cut in half in 2015. This major slowdown, also experienced by our competitors, is in fact largely due to global macroeconomic trends. Two cycles came to an end about the same time: a slowdown in China’s growth; and a precipitous drop in the price of oil and raw materials, which is a problem not only for the Gulf countries, but also for Russia and Brazil. In addition to these structural problems, there are also more specific issues that weigh against growth, especially in Europe: the possibility of a British exit from the EU (Brexit), the Ukrainian situation, the migrant crisis and terrorist threats. Given these circumstances, it’s impossible to forecast 2016 developments. Because of this uncertainty, we have to be flexible enough to quickly adapt to market fluctuations. Who could have imagined that we’d sell more Rafales than Falcons in 2015?Fortunately, flexibility has always been the watchword at Dassault Aviation. Our streamlined structure, digital processes and dual civil-military capabilities allow us to react quickly and overcome crises. That’s why, in a century of existence, we have never had a single loss-making year.
Where does the Falcon 8X program stand today ?
At March 31, 2016, the three aircraft used for development tests had logged the 550 hours needed for certification, which we’re expecting at the end of June. Falcon 8X No.3, which has been fully outfitted, has completed a series of tests to validate its completion and options, along with thermal and acoustic comfort tests in February. Mérignac is now assembling several Falcon 8X jets so we can start deliveries in the second half of 2016, on schedule.
The Falcon 5X is late – how are you handling this situation ?
Because of the development difficulties with Snecma’s Silvercrest engine, and the associated timetable (with certification of this engine slipping from 2015 to 2018), we were forced to adjust the 5X program schedule in early 2016. First deliveries are now planned for the first half of 2020, and all of our customers have been informed of this change. We are still firmly convinced that the Falcon 5X will offer a cabin and performance that is unrivaled on the market.
Are you holding talks with new prospects for the Falcon 2000 MRA ?
In 2015, we sold two Falcon 2000 MRA planes to the Japanese coast guard. This contract was won on a purely technical and financial basis, demonstrating the superiority of our new maritime surveillance aircraft. We now have a first export contract under our belt for this aircraft, which should have a brilliant career. We have submitted proposals and others are expected, because there’s very strong demand for this type of aircraft, used in missions including the fight against piracy, trafficking and pollution, fishery control, search & rescue, intelligence, etc.
What are your top priorities from a management standpoint ?
To improve our competitiveness in our fiercely competitive context, we must reduce our costs, which will have a direct impact on sale prices despite the drop in the euro’s value. We must undertake a real transformation of our company to achieve the industrial efficiency and financial performance that will allow us to beat our competitors, while still generating the funds needed for future investments. We also have to enhance our flexibility so we can respond more quickly to market fluctuations, which are less and less predictable in our increasingly uncertain world.
Furthermore, digital tools and industrial processes, no matter how advanced, will never replace people. Dassault Aviation has always had employees with exceptional expertise, experience and a passion for their profession. We pay particular attention, as we always have, to developing and transmitting these precious skills and knowledge.
How would you describe your relations with Thales ?
As a core industry shareholder, I am delighted with the development of Thales. This company contributes to Rafale’s success in export markets. It is improving its operating margins, and that flows through to our own accounts. Thales is also increasing its order intake. In short, Thales is continuing its transformation, to the great satisfaction of its customers, partners and shareholders.
You’re celebrating the company’s centenary in 2016. What lessons have you learned from this long history ?
Our successes are built on a singular legacy and culture, anchored in a deep passion for aeronautics, a mindset of continuous innovation, great perseverance and an ongoing focus on customer satisfaction. Our employees’ loyalty to the company nurtures technological excellence, by capitalizing on our knowledge base and transmitting skills and knowledge. Efficient management ensures the financial health that guarantees our long-term viability, and allows us to launch new programs. And of course our family shareholding and mindset guarantee management stability and the continuation of an advantageous social policy.
These are the timeless values that have always driven the success of our airplanes, under the impetus of Marcel Dassault, Benno-Claude Vallières, Serge Dassault and Charles Edelstenne. In March 2016 these values won further recognition when Dassault Aviation received the Randstad Award as the most attractive French company.
For the next one hundred years, Dassault Aviation fully intends to remain a world leader in combat and business aircraft. Building on the exceptional skills developed over the last century, plus the widespread use of advanced digital technologies and our expertise in complex systems, we will continue to construct beautiful airplanes for the world’s armed forces and our commercial customers, and support the growth and international influence of our national economy
Chairman and Chief Executive Officer of Dassault Aviation