France Helps Dassault Aviation with Singapore Military Jet
Competition
By Pierre Tran, Sunday Business, London Knight Ridder/Tribune
Business News
Feb. 22 - The French government has flown to the aid of Dassault
Aviation, signing a E659 million ($850 million, UKpound 441
million) contract that allows the aircraft-maker to build an
advanced version of its Rafale jet, which is competing in
Singapore's tender for new fighter planes.
Singapore's $2 billion competition for 20 combat aircraft is a test
of Dassault's ability to sell the Rafale into export markets. The
French plane is pitched against the Eurofighter Typhoon and
Boeing's F-15 Eagle.
The signing with the French procurement office last Tuesday allows
Dassault to go to the Singapore Air Show this week with a contract
in hand that assures financing for work on a Rafale F3
fighter-bomber model being offered to the Asian city state.
Dassault's chief executive, Charles Edelstenne, said the company's
share of the development contract would be E457 million. Thales,
which builds the radar, will snare E100 million, with the rest
shared between electronics company Sagem and missile builder
MBDA.
The contract comes as welcome news to Dassault, which faces
uncertainty over a planned order for 59 Rafales for the French Air
Force, which had been due last year.
Because of budgetary problems, successive governments postponed
Rafale orders, which led to obsolescence of some of the electronic
parts designed a decade ago.
The contractors and the government have been locked in a dispute
over who should pay for replacing the outdated electronics and
testing new parts, estimated to cost E200 million to E300
million.
The government is negotiating over financing the replacements, but
that will probably involve a trade-off, which could lead to
postponing orders for 11 or 12 jets in the batch of 59
aircraft.
The defence budget runs to 2008 and an amount has already been
earmarked for the Rafale programme, so deferrals would be pushed
into the next budget.
Dassault insists the production line needs an output rate of one
and a half jets a month to be viable, and previous plans had been
for two planes a month. Deferrals would hit revenues and increase
unit costs.
Edelstenne pours scorn on critics of the Rafale, saying if France
had joined the four-country Eurofighter programme, it would have
cost 40 percent more to buy the same number of aircraft, because of
cost overruns due to Eurofighter's technical hitches.
Dassault saw a slide in orders for its Falcon business jets for
2003, with only 40 aircraft sold, compared to 72 in the previous
year. Edelstenne said 2003 was the worst year in civil aviation in
the past 10 years. Most Falcons are sold in the US market.
Net profit for 2003 fell 5.4 percent to E295 million from E312
million, on sales of E3.3 billion, down from E3.44 billion. New
orders dropped to E2.42 billion from E3.52 billion. The outlook for
2004 was uncertain.
