Dassault Aviation has decided to reduce the combined
production rate for Falcon business jets next year, in response to a weaker
demand for these aircraft. "Today, we have a healthy 159-aircraft backlog. We
will maintain the current delivery pace up to mid-2003, then cut production to
five aircraft monthly, down from six or seven," Chairman/CEO Charles Edelstenne
told AviationNow. Since Jan. 1, the French manufacturer concluded orders for
more than 75 Falcons.
Dassault's cautious stance results from the ongoing economic downturn,
exacerbated by post-9/11 concerns, and the anticipated market uncertainty if the
U.S. mounts strikes against Iraq. "The U.S. economy is not recovering, Europe is
lagging and we fear a [more serious] global crisis, the worst environment we
could think of," Edelstenne pointed out. Dassault's competitors, already hit by
slower sales, have slashed production and cut jobs. "The time is ripe to
demonstrate how flexible Dassault is," Edelstenne said.
... Military vs. Bizjet Contracts
In the last few years, two- and three-engine Falcon jets generated an
increased proportion of the company's total revenues and largely exceeded
military sales. During this year's first half, business jets accounted for 72
percent of the company's €1.47 billion ($1.44 billion) revenues. However,
defense-generated sales are expected to gradually return to a significantly
higher level as deliveries of the Rafale combat aircraft adopt an accelerated
pace.
Business jets nevertheless retain a key role in Dassault's long-term
strategy. In an initiative that could lead to an expanded product range and
bigger share in the business aviation market, Dassault has begun exploring the
merits of a mid-range business twinjet. "If we could offer such an aircraft with
a price tag of no more than $10 million, we would certainly attain impressive
results. But, of course, this could not be achieved. However we are considering
workable compromises," Edelstenne said. "No decision has been taken as yet, we
are just beginning our studies."
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