Interview: Dassault's Eric Trappier

[MICA]

Dassault Aviation is poised to enter a new era with renewed strength in the order book for the Rafale fighter and preparing for the future with studies on combat and surveillance drones, said Eric Trappier, chairman and chief executive. New versions of the Falcon business jet also usher in a bright outlook.

The family-controlled company celebrates 100 years of aeronautical pursuit next year. In 1916, founder Marcel Dassault designed a propeller for the Spad biplane fighter, which flew dogfights in World War I.

Dassault has hit the headlines after winning a pledge from France, Germany and Italy to launch a concept study for a European medium-altitude, long-endurance UAV, and Rafale orders from Egypt and Qatar. New Delhi is seen as a near-term prospective client for the Rafale, following the Indian prime minister's announcement of a plan to buy 36 in a government-to-government deal.

Q. The Indian defense minister has said the Rafale is "way too expensive," and ruled out buying more than the announced 36. What is your reply?

A. It is under negotiation. The Indian Air Force needs many more than 36 planes. There is an immediate need for 36. The negotiations for 126 are rather slow. They have an urgent operational requirement which does not allow time needed to set up the license, so they asked for 36 quickly. When I say quickly, that is production time — three years. That is quicker than building under license and completing the negotiations. The problem is not the three years. Buying 36 built in France will be faster than setting up complex production under license, which we are still negotiating — who does what, who's responsible for what.

Q. Are there other export clients that could be signed this year?

A. I hope India will be signed by the end of the year. The decision to go to a sale on a government-to-government basis will help speed things up. We're not going to stop at two or three contracts this year. We're hoping to sign a fourth by the end of the year.

There is strong interest among other countries because operational export success is boosted by export and media success. There is interest in the Middle East, Asia, even North and South America. I am not saying the US is going to buy the Rafale, but if it wants to, it can.

Canada is undecided whether to buy the F-35. There has never been a competition between the F-35 and the Rafale. The Belgians have to replace the F-16. There is a study by the Belgian Air Force, the only F-16 user in Europe which has not signed up for the F-35. The other Europeans joined the [F-35] program, which means they finance US technology. It's a political choice; I respect that. The Americans have understood industrial development is part of the wealth of the nation. Europe has not got it; it will come. Europe produces politics, America produces industry.

Q. Will the export orders lead to an increase in Rafale production?

A. Today we are at one per month and we will stay at 11 [per year] for the next two or three years as the contracts signed with Egypt and Qatar can stand as substitutes for the French services. The big change comes when the third contract is signed, assuming the contract will be significant. For example, if we win the 36 for India, I will need to increase production. That depends on the Indian contract being signed.

There will be zero delivery for the French from next year. There will effectively be a suspension — not a cancellation — with deliveries back again from 2020 after four years.

Q. Why did it take so long to win an export contract?

A. It took less than 10 years, depending on the point of reference. For me, it was when the plane was delivered and operational in the [French] Air Force rather than the Navy. The Air Force formed the first squadron in 2006. From then, one could see the plane was well adapted for a range of missions. It replaces the Mirage for nuclear deterrent. It flew in Afghanistan, Libya, Mali, now Iraq. It flies from French bases or allies such as the [UAE's] Al Dhafra base, and from the aircraft carrier.

We had to wait for the situation to be favorable. The strategic relations with the countries, they evolve but they remain steady. Egypt and Qatar — and perhaps the third with India — are three countries which have always flown Dassault aircraft, always had strategic partnerships with France. The ground was already well-prepared. Then there is geopolitics. That is tied to local factors for Egypt, Qatar and India, and other countries.

There is the economic factor, the euro/dollar exchange rate. I remember in [South] Korea the Rafale cost less than the F-15. The euro/dollar was almost at parity but in combat planes there are geopolitical factors, not just price. The euro has fallen against the dollar, so the price of French planes has fallen against American planes. Put all that together, with a tightly knit French team, with companies behind Dassault on the industrial front, and strong defense and foreign ministers behind President [Francois] Hollande on the political front. And there is a bit of luck — there is always some luck.

Q. Why did Nicolas Sarkozy fail to sell the Rafale when he was president?

A. The geopolitics were different. The US politics were not the same, relatively speaking. Today there is a mobilization of the French defense and foreign ministries, perhaps there was less in the past. There is a president's commitment toward export that goes back years, and the result is there. It's France that wins.

The Rafale is an excellent high-technology product that meets perfectly the needs of the services. The Rafale should be taught as an example when the arms programs are explained at school. It practically stayed within budget. It has flown in operations. It lacked exports, which are there now. The only problem was the French defense budget fell and we had to wait. We had to be patient to succeed in exports.

Q. How are the talks with the United Arab Emirates? Is there still a request for a 9-ton engine thrust?

A. Aircraft effectiveness does not come down to its engines; it's the overall aircraft performance. The Rafale has shown its performance, the missiles have improved over the years. [The UAE] has the F-16, the Mirage 2000-9. We're supporting them on the Mirage 2000-9. We never stopped talking about the Rafale for the last 10 years. There were advanced talks up to 2012 but they were not contract negotiations. It's a prospective client.

Q. The French, German and Italian defense ministers have signed a declaration of intent for a definition study for the MALE UAV. When do you expect to sign a contract?

A. We will receive a contract in the next few weeks and that allows us to start real work on the drone for the 2020s. The priority is for France, Germany and Italy, and there is potential for development with other countries. The target is to have a European capability in this sector. The Israelis and Americans won the first round, the French were absent. Industry made proposals which failed to attract the government.

Q. How important is the European MALE UAV?

A. The goal is not to remake the Reaper or Heron but to build the next-generation surveillance drone which will fly in 2020 or 2025. The drones will be able to fly in Europe, not just overseas, over residential areas and in civil airspace. There are other emerging needs.

It is easier for Airbus and Dassault to cooperate as there is less talk about consolidation. Airbus has been selling its stake in Dassault to Dassault. As normal companies we can cooperate when it is in our interest. There is no need for a merger to cooperate.

We have know-how for the unmanned combat aerial vehicle and UAV, which have similar technology. We have a small advantage. We don't just make fighters, we also build the Falcon maritime surveillance aircraft, and modernization on the Atlantique. We have the know-how for systems integration. We have the design office capable of integrating a system on a small platform. As the F-35 experience has shown, mastering complexity is not easy. We are well-placed to contribute, whether it is combat with the British, or a surveillance drone, which will be capable of carrying weapons.

Q. What is the outlook for consolidation of electronics company Thales and naval systems specialist DCNS?

A. We are in a stable but uncomfortable position. Thales holds 35 percent in DCNS, the government 65. When we are 50:50 with the government, it is the government which decides. When it is 35: 65 it is even more the government. It is not a satisfactory position in the long term. It is manageable.

There are no particular problems, although DCNS ran into financial difficulties in 2014, which were reflected in Thales and Dassault results. I hope DCNS management, closely tracked by Thales, will put it back on the right path.

What happens next? Either France privatizes DCNS — let's see which are the potential owners — or France finds a partner shipbuilder in Europe.

Q. France added €3.8 billion to the multiyear defense budget. Is it enough?

A. The increase is in relative not absolute terms. NATO wants members to commit to 2 percent of gross domestic product. France has dropped below 1.5 percent. I welcome the increase but the budget is not at the right level.

However, it has to be said France maintains its defense effort even if it is not enough. France is active in overseas theaters, which costs. That is obviously for French interests but also it plays its role in the international and European community. There should be financial recognition for France, which contributes more than others. In Europe, either we build a European defense, which will take decades, or maybe Europe should through the budgetary mechanism help those which do more.

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[Taygibay]

Had read that earlier but thanked it nonetheless.

Read you tomorrow buddy, Tay.