Dassault Aviation had a slow start to the year, with its order book almost empty. However, the French aircraft maker is hopeful of bagging potential orders for 100 units, including orders from the Indian Navy for Rafale M and from the Indonesian Air Force for a follow-on order for 18 more Rafale fighter jets.
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The company also blames the ongoing Russia-Ukraine war for triggering a crisis in the aviation market.
Also, the slowing down of economies has reduced the demand for business jets, but the fighter jet manufactured by it will pick up pace in the second half.
The first half of 2023 had no orders for Rafale fighter jets. However, the French aircraft manufacturer still has its objectives in sight that can translate into a fruitful second half regarding orders and deliveries.
“The best is yet to come for Dassault Aviation in 2023… Because the first half of the year has been a real half-year of transition for the manufacturer, which has not yet garnered any Rafale orders this year and which has also suffered from a very capricious business aviation market (only 12 Falcon fighter jet orders compared to 41 in the first half of 2022),” French magazine La Tribune noted.
The Half Year Financial Report of Dassault Aviation paints a grim picture. In the first half of 2023, the French aircraft maker had an order of 1.68 billion euros compared to 16.29 billion in the first half of 2022.
Over the first six months of 2023, Dassault Aviation delivered only four new Rafales (two for Greece and two for France) compared to seven in the first half of 2022. Besides this, four second-hand Rafales were exported to Athens.
“This resulted in a sharp drop in Defense Export revenue to € 851 million, compared to €1.45 billion in the first half of 2022,” the report says.
In addition, the aircraft manufacturer has only supplied its customers with nine Falcons (compared to 14 in the first half of 2022). Falcon revenue also slowed to 827 million euros (compared to 961 million in the 1st half of 2022).
“This decrease is mainly explained by the number of Falcons delivered, partially offset by the increase in support and spares turnover,” explained Dassault Aviation in its press release issued on July 20.
The post-Covid upturn in growth witnessed in 2022 led to a slowdown in sales in the last quarter of 2022, which has continued in the first half of this year. As per data, twelve Falcon orders were recorded in the first half of this year, compared with 41 in the first half of 2022. Nine Falcons were delivered in the same period, compared with 14 in the first half of 2022.
Explaining the slowdown, Dassault’s CEO Eric Trappier noted at the end of the first half of 2023 that the business aviation market in North America is “recovering” and in Europe “remaining at a good level.” He added that although China has slowed down, Asia is developing increasingly, driving the demand for more business jets.
Defense Export order intake totaled EUR 572 million in the first half of 2023 versus EUR 13,897 million in the 1st half of 2022. In 2022 Dassault got orders for 80 Rafale for the UAE and an additional order for six new Rafale for Greece.
Bleak First Half To Pave The Way For A Strong Second Half Of 2023
Dassault Aviation doesn’t have to worry about empty order books for long. “India recently announced that it has selected the Rafale Marine for a government-to-government purchase. The manufacturer will provide 26 maritime versions of the Rafale aircraft for the Indian Navy,” says La Tribune. India has already purchased 36 fighter jets for its air force.
“It (contract with the Indian Government) is not impossible. According to our information, New Delhi will implement this contract by the end of this year following negotiations with Dassault Aviation,” the report added. In addition, the aircraft manufacturer is also expecting orders for the “second tranche” of 18 Rafale aircraft from Indonesia. The deal for the follow-on order is expected to be worth US $ 2.3 billion. In February 2022, Indonesia signed a contract to purchase 42 Rafale fighter jets.
The CEO of Dassault Aviation, Eric Tappier, hopes for the deal for the remaining 18 Rafales in the coming months. “We expect the implementation of the contracts for 36 aircraft to Indonesia in the coming days for 18 (editor’s note) and in the coming months for the additional 18,” said Trappier.
Finally, Dassault, which has submitted a proposal to the Directorate General of Armaments, is firmly counting on the Ministry of the Armed Forces to contract the 42 Rafales of the fifth tranche (5T), of which 20 aircraft will have to be delivered between 2027 and 2030. This will bring the number of Rafales in the French Air Force fleet to 137. “An order book which should logically increase before the end of the year,” assured Eric Trappier.
In total, Dassault Aviation could record a potential order intake of 104 Rafale in 2023 (compared to 92 in 2022). Not to mention many more random prospects now, like Serbia and Colombia.
Russian-Ukraine War Slowing The Flight Of Dassault Aviation
The war in Ukraine, which Russia started on February 24, 2022, triggered a major crisis in the aviation sector, “leading to shortages and putting significant pressure on supplies.” Dassault is apprehensive that it can have a lasting impact on its partners, sub-contractors, and customers. The sanctions announced by the West against Russia have impacted its supply chain if not its financial statements.
“The regulations adopted by the European Union and the United States are strictly enforced by the Group, especially the ban on commercial transactions and the restriction on financial transactions with sanctioned persons or entities,” the financial report read.
“Some entities in the European maintenance network have been significantly affected by the loss of Russian customers. Operations in Russia, the Moscow office, and the Dassault Falcon Service maintenance subsidiary have stopped doing business in 2022.
As of June 30, 2023, the effects of the Russia-Ukraine conflict still had no material impact on the Group’s financial statements,” it adds.
Beyond the success of the Rafales for export, which will lead the manufacturer to increase its production rates from one to three aircraft per month, Dassault Aviation underlined that on “the current market for business jets, the rebound in growth observed in 2022, following the Covid period, started to slow down during the last quarter of 2022, a slowdown which continued in the 1st half of this year.”
- Ritu Sharma has been a journalist for over a decade, writing on defense, foreign affairs, and nuclear technology.
- She can be reached at ritu.sharma (at) mail.com
