Dassault Aviation reports more cancellations than orders for 2009, fall in net profit

Dassault Aviation, the aircraft manufacturer based in France, has forecast that there will be a drop in the net orders for its Falcon jets in 2009 as a result of the global economic recession.

Dassault Falcon 7x jet photo

Charles Edelstenne, chief executive officer of Dassault Aviation, said in a statement that the company was witnessing more cancellations than orders in the last quarter of 2008 and that the trend had continued in 2009.

Dassault Aviation, a subsidiary of Dassault Group, makes military, regional and the Falcon line of large business jets.

You can see our last story on Dassault 7X business jet here

Edelstenne was quoted by the media as telling a news conference: “If we end the year 2009 flat, that is to say, no more Falcon cancellations than new orders, I will be overjoyed. But my feeling is that it will be worse than that.” According to Dassault Aviation, which also makes the Rafale multi-role combat fighter jets, the net profit declined by 2.4% in 2008 373 million euros, and this partly reflected fall in export of military aircraft.

Dassault Aviation said it received orders for 115 planes in 2008, and delivered 72 planes. The total order intake in 2008 was worth 5.82 billion euros –down by 7% compared to 2007. The company’s operating profits went down to 434 million euros from 503 million on revenues which fell to 3.748 billion euros from 4.085 billion euros.

The company’s sales, according to the statement, amounted to 3.75 billion euros in 2008 – with sales of business jets accounting for 62%.

In 2009, deliveries are expected to rise to 90 aircraft, compared to 72 planes in 2008, depending on cancellations. However, the production of “green” planes is likely to be reduced, Dassault Aviation said.

Some deliveries planned for 2008 were held up because of tighter administrative controls at the United States Federal Aviation Administration (FAA), according to the company.

Charles Edelstenne told reporters that Citigroup Incorporated, Royal Bank of Scotland PLC and the United States-based insurance firm American International Group, which had ordered Dassault jets, were now in serious financial trouble and “the orders from these clients are now worthless.”

Dassault started seeing a slump in demand in late 2007, John Rosanvallon, president and chief executive officer of Dassault Falcon Jet, said in the statement. However, he added, though the level of activity stayed strong through the first three quarters of 2008, the fourth quarter of 2008 was “challenging with rising pre-owned inventories and a significant contraction of available credit.” The plane maker said its company-owned service centres would be expanded in 2009.

Also, Dassault’s new Falcon 2000LX would be certified soon. The EASy Phase II avionics enhancements – which include synthetic vision technology – would be offered as an option in all new Falcon 900EX EASy and Falcon 900DX planes by the end of 2009.

EASy II, the company said, would be provided on Falcons 7X, 2000LX, and 2000DX planes in mid-2010. The EASy Phase II avionics enhancements would be available as a retrofit in earlier EASy-equipped models, too.