Strategy
Interview with the Chairman and CEO
June 30, 2020
This Welcome Aboard is being released at a critical time…
We are in the midst of a global Covid crisis. However, we were determined not to forego this opportunity to report on our activities, especially since 2019 was such a busy year.
The crisis has had far-reaching consequences in terms of public health and an unexpected impact on health care systems. My thoughts go out to those affected by the disease and to the medical staff who have taken care of them with admirable dedication; we have endeavored to help them by putting our resources at their disposal: transporting health care personnel in Falcon business jets, manufacturing visors, delivering meals, and so on.
We are facing a very serious economic crisis. Beginning in April, on the recommendation of the Board, we suspended our 2020 guidance and, in agreement with our shareholders, we have not paid out any dividends for 2019; I would like to thank the Dassault family for their support in this regard – they have once again risen to the occasion to meet this historic challenge. As a member of Gifas, we also took part in the negotiations that led to the support plan for the aeronautics industry launched by the French government at the beginning of June.
How did you manage operations during the health crisis?
We maintained our core activities: supporting our customers; maintaining the operational capability of the French Air Force both at home and in operational theaters; pursuing priority projects; delivering aircraft; maintaining certain core skills, tools and facilities both in-house and in terms of our supply chain. This scaled-back business continuity was introduced in consultation with employee representatives and once the necessary health procedures had been put in place. At the beginning of June, we began the process of resuming normal operations.
What were the highlights in your military business in 2019 and early 2020?
The most important development was the official announcement, in February 2020, by the French and German governments of the contract enabling the launch of the Next Generation Fighter (NGF) demonstrator, as part of the Future Combat Air System (FCAS). With regard to the Rafale, in 2019 we delivered 26 aircraft and related services, all to export customers outside France, began development of the F4 standard and signed the Ravel support contract for France’s Rafale fleet. Other highlights include the delivery of the first modernized ATL2s, France’s order for the first two Falcon 8X Archange strategic intelligence aircraft, the delivery of four Falcon 2000 MSAs to the Japan Coast Guard and the concept definition study for the Falcon 2000 Albatros for the French Navy.
What about business aviation?
We delivered 40 Falcon aircraft last year and sold exactly the same number. These figures reflected the extremely competitive nature of the market. They also show how unfortunate it is that we do not have the Falcon 5X in our range. This ultra-widebody jet was scheduled to enter service in 2017, but we had to discontinue the program because of the difficulties encountered with the Safran Silvercrest engine. The 5X is being replaced by the Falcon 6X, powered by Pratt & Whitney engines, which will be available starting in 2022.
In addition, we acquired MRO service center networks from Ruag, ExecuJet and TAG Europe with a view to further reinforcing our after-sales support activities. In this area, which is key to customer satisfaction, the Company’s efforts were rewarded with first place rankings in both the AIN and ProPilot surveys.
What are your priorities going forward?
The health crisis is not yet over and the economic crisis is only just beginning… We need to monitor the evolution of the business aviation market in the coming months. However, we have already decided to maintain our self-financed investment for the expansion of the Falcon range, with a special focus on the 6X. We are also working on a Future Falcon. Meanwhile, within the framework of the support plan and in conjunction with our industrial partners, we are stepping up the work we are already doing in the field of green aviation as a member of France’s civil aviation research council, Corac: sustainable alternative fuels, high bypass ratio engines, more electric aircraft, hydrogen propulsion.
In the military arena, there is also much at stake. The defense sector acts as a buffer against crises for companies that, like Dassault Aviation, have a strong dual civil/military focus. Regarding the Rafale, we need to secure an additional tranche of contracts extending beyond 2024, move ahead with the F4 standard, continue to seek out new export prospects and make deliveries to India and Qatar. As for the special-mission Falcons, we need to complete the Archange contract and ensure the launch of the Albatros program. Finally, as part of the FCAS, with regard to the NGF, we need to secure new tranches of contracts in order to lead the joint development of the demonstrator, with 2026 as the target date for its maiden flight.
The most important factor in bringing all these projects to a successful conclusion in the unprecedented times we are living through is mindset: our mindset is the one summed up so well in the motto of the French Air Force: “Rise to the challenge.” To this I would add the need for responsiveness, flexibility and tenacity, three qualities that Dassault Aviation has always fostered and which have enabled us to overcome various crises over the past century.