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Dassault May Be Next In Line For Takeoff


Thundering choral music echoed through the hall as a laser light show played over the audience. Outside, a buffet of champagne, oysters, and foie gras awaited. Finally, a black curtain rose to reveal...the Falcon 7X, the newest jet in the lineup at French aircraft maker Dassault Aviation. In staging the splashy Feb. 15 launch at its factory in Bordeaux, Dassault served notice of its ambition to grab a bigger share of the lucrative market for business jets -- those sumptuous, custom-outfitted planes favored by corporate bigwigs, Hollywood stars, and billionaire sheikhs.

Could Dassault become the next Airbus -- a come-from-behind European planemaker that elbows aside bigger rivals? At first blush, it seems unlikely. The Paris-based company has been building private jets since 1963 and boasts race car champion Michael Schumacher and Prince Rainier of Monaco among its customers. But it's still No. 4 in the industry, well behind leaders Bombardier and General Dynamics (GD) subsidiary Gulfstream Aerospace.

But now Dassault may have an opening. The 7X, set to go into regular service in late 2006, will generate marketing buzz as the industry's first all-new model since the 1990s. Dassault is rolling it out just as the industry is pulling out of a three-year slump that saw business-jet sales plummet by more than a third. "The recovery has begun, and with the 7X we are perfectly positioned to take advantage of it," says CEO Charles Edelstenne. Projections by Forecast International Inc., of Newtown, Conn., show Dassault edging Cessna Aviation out of third place by 2008.

The turnaround is evident in Dassault's order books. The French company logged 69 business-jet orders last year, up from 40 in 2003. Fifty 7X jets are now on order, enough to keep the Bordeaux factory humming through 2008. On Feb. 17 the company announced that 2004 profits rose 4%, to $402 million, on revenues of $4.51 billion. Falcon business jets account for 61% of sales, with the company's Mirage and Rafale fighter jets making up the rest. Dassault's competitors are also reporting stronger private-jet sales thanks to a healthier economy, the demise of the supersonic Concorde, and post-September 11 security measures that make commercial flights more time consuming.

A TECHNO GIANT

Dassault has its eye firmly on the top end of the business-jet market -- bigger, long-range planes selling for more than $40 million, a business now dominated by Gulfstream and Bombardier. The 7X, Dassault's biggest and most luxurious plane yet, lists for $39 million and boasts superior sound-proofing and more comfortable cabin pressure. It can fly eight passengers up to 5,700 nautical miles -- from Paris to Tokyo, for instance. While competitors' top-of-the-line models can fly even further, not many customers need the extra range, says Kevin R. Russell, executive vice-president of NetJets Inc., a U.S.-based company that sells fractional ownership in business jets. "The Dassault Falcon people are very astute in judging their markets." NetJets already operates about 60 midsize Falcon models and is considering an order for the 7X, Russell says.

The 7X is also a technological feat. It's the first plane to use a new generation of design software that allows engineers to simulate every step of the process digitally. Dassault says that by using a digital mock-up that feeds data directly to production equipment, it has cut assembly time on the 7X by 50% compared with earlier models.

Dassault sank some $700 million into developing the 7X -- an investment it did not have to justify to its shareholders. Although publicly traded, the company is 96% controlled by the Dassault family and the giant European Aeronautics Defence & Space Co. "Of the major players, they're the only ones who don't have to look over their shoulders at the equities markets," says Richard Aboulafia of the Virginia-based Teal Group. Looks as though Dassault is set for a long flight.

By Carol Matlack in Bordeaux


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