Falcon sales down in ’03, but looking up

 - March 29, 2007, 1:04 PM

Falcon business jet orders and deliveries last year decreased by 44 percent and 26 percent, respectively, according to Dassault chairman and CEO Charles Edelstenne. At the company’s headquarters in Saint-Cloud, France, in mid-February, Edelstenne said orders for 40 Falcons were received last year, down from 72 in 2002. Deliveries fell last year to 49 Falcons, from 66 in 2002.

Meanwhile, two programs are proceeding, with major milestones expected in the coming months.

The Falcon 2000EX with the EASy flight deck is expected to be certified in June and final assembly of the first 5,700-nm Falcon 7X should start this summer.

Edelstenne said 13 EASy-equipped Falcon 900EXs are currently in service. Deliveries of the latest Falcon 900 started shortly after the FAA and the European Aviation Safety Agency (EASA) in November certified the new variant of the 4,500-nm aircraft.

The Falcon 2000EX EASy should cross the certification finish line this summer, some 15 months after its first flight. The first 30 or so Falcon 2000EXs will be delivered with a conventional cockpit; the remainder will come with the EASy flight deck, which is based on the Honeywell Primus Epic integrated avionics suite.

Among last year’s orders for 40 airplanes, 10 were for the newest model, the Falcon 7X. Firm orders  have been received for 39 of the 5,700-nm trijets, first flight of which is scheduled for the first half of next year. Final assembly of the first 7X will begin this summer at Dassault’s factory in Bordeaux Mérignac, France. Edelstenne emphasized the industrial process acceleration allowed by new, integrated digital tools: “We set a speed record by having the last 7X drawings released on December 31. The first subassemblies will be coming to Mérignac in July and the first aircraft is to be completed in October,” he said. In addition, he expects fewer problems at the beginning of the production run.

Asked whether some Dassault engineers are still evaluating a supersonic business jet, senior vice president Bruno Revellin-Falcoz answered, “Yes, but we have limited activity on this as we do not see a need emerging in the mid-term.”

One year ago Edelstenne anticipated that Falcon deliveries would be in the 50 to 60 aircraft range. According to figures from the General Aviation Manufacturers Association, the 49 deliveries included eight Falcon 50EXs, 12 Falcon 2000s, 16 Falcon 2000EXs, three Falcon 900Cs, six Falcon 900EXs and four Falcon 900EX EASy trijets.

Falcon activities accounted for 51 percent of Dassault’s revenue last year, with the remaining 49 percent coming from military sales. In 2002, Falcons composed 65 percent of Dassault’s annual revenue. According to Edelstenne, Falcons should still represent more than half of Dassault’s revenue this year.

Dassault Aviation’s income stagnated last year, mainly because of the sharp drop in Falcon deliveries. An increase in military sales almost counterbalanced the effect of the sluggish civil market. At €3.30 billion ($4.13 billion), total revenues last year are 4 percent lower than in the previous year. “The difference is only due to the effect of a weak dollar,” Edelstenne asserted.

Revenue from civil sales stood at €1.69 billion ($2.11 billion), and defense income sharply increased to €1.06 billion ($1.32 billion), thanks to Mirage 2000-9 deliveries to the United Arab Emirates. Dassault’s net profit remained steady at 9 percent, with a net result of €295 million ($369 million).

Revenues from civil and military aircraft deposits last year declined by 31 percent to €2.42 billion ($3 billion), again mainly because of the downturn in business aviation. Falcon orders (40 aircraft) represented half the average of the last six years. But they still accounted for 58 percent of total orders, the rest being defense sales. Civil orders were valued at €1.39 billion (approximately $1.73 billion), and the second half of 2003 was better than the first one for this segment, with 25 of the 40 aircraft ordered during that period.

As of December 31, Dassault’s backlog was down 9 percent to €9.16 billion ($11.45 billion). Civil aircraft account for 37 percent of the backlog, with defense taking up the remainder (26 percent for export and 37 percent for combat aircraft in France).
Earlier this year the production rate of Falcons was increased to five a month, compared with four per month last year. This is in response to what Dassault believed was a slight market upturn that began at the end of last year. However, Edelstenne said the trend is fragile. Before the dow

Edelstenne said that, so far, the downturn has not affected the size of the workforce in France. The Dassault executive is optimistic that Falcon orders will climb this year.