Dassault's Rafale Fighter Jet Dealt Blow by French Minister
By Andrea Rothman | December 07, 2011 2:58 PM EST
Dassault Aviation SA (AM)'s Rafale combat jet, which hasn't won a single export order after 11 years of flying for the French military, was dealt a blow from some unusual quarters: the French government.
Defense Minister Gerard Longuet said in an interview today on LCP television that unless the jet finds a buyer abroad, the government will quit funding its production, effectively killing the programme.
"If Dassault doesn't sell the Rafale abroad, the production line will be stopped," Longuet said. The aircraft " "is more expensive than its rival U.S. plane, which is amortized over a much longer period," he said. Longuet didn't specify when the line would be stopped.
Over the last decade, Dassault has consistently lost out in competitions in countries including Singapore, South Korea, Morocco, and last week, Switzerland. Although it has been producing a plane a month for the French military, without export orders to help pay the cost of production, its funding burden falls entirely on France.
Longuet's comments can only hurt efforts to sell the Plane overseas, one analyst said. Dassault couldn't immediately be reached for comment.
"The comments are the equivalent of hammering a stake into the program," said Richard Aboulafia, vice president of the Teal Group, a Fairfax, Virginia consulting company. "This is catastrophic, it's poorly thought out, and one wonders what the motivation was for saying it."
Uncompetitive Offering
Dassault had appeared poised to win an order from the United Arab Emirates until last month, when Abu Dhabi Crown Prince Sheikh Mohammed bin Zayed Al Nahyan said Dassault's Rafale offering was uncompetitive.
"Unfortunately, Dassault doesn't realize that political will and all the diplomatic efforts cannot overcome uncompetitive and unworkable commercial terms," Sheikh Mohammed, who is also deputy supreme commander of the U.A.E.'s armed forces, said in a statement issued by state-run news agency WAM.
Dassault is a finalist with the Eurofighter in competing to sell India 126 warplanes. India has said it may announce its choice by yearend.
"I thought Dassault still had a shot at winning in the UAE, despite the back and forth, and in India, they may not have the majority chance, but they still had a shot at it," Aboulafia said. "But why would any country buy a program that France doesn't want?"
The planemaker is controlled by the Dassault family's Groupe Industriel Marcel Dassault, which owns a 50.55 percent stake. European Aeronautic Defence & Space, the parent of the Airbus SAS commercial jets, owns 46.3 percent and the public holds the rest.
Bloomberg