Join +750K new investors every month who copy stock picks from billionaire's portfoliosSign Up Free

UPDATE 2-Dassault Aviation to build new $47 mln business jet after scrapping Falcon 5X

Published 2018-02-28, 12:19 p/m
UPDATE 2-Dassault Aviation to build new $47 mln business jet after scrapping Falcon 5X
SAF
-
GE
-
TXT
-
AM
-

* New Falcon 6X available from 2022 for $47 million

* Replaces Falcon 5X cancelled in December over engine delays

* Dassault says in talks with Safran over compensation

* Business jet market showing signs of recovery

By Tim Hepher

LE BOURGET, France, Feb 28 (Reuters) - Dassault Aviation AVMD.PA announced plans for a new long-range business jet on Wednesday, renewing a battle with Gulfstream GD.N at the top end of the market as demand for the ultimate status symbol recovers from a prolonged recession.

The new Falcon 6X plane will be able to fly from London to Los Angeles and will enter service in 2022, Chief Executive Eric Trappier told journalists at a business aerodrome outside Paris.

"It will feature the most spacious cabin in the long-range segment," Trappier said in a vast showroom for prestige jets, adding that it would sell for $47 million.

Dassault launched the plane two months after scrapping its large-cabin Falcon 5X model, citing a three-year delay in the Silvercrest engine developed by Safran SAF.PA . aircraft announced on Wednesday will instead be powered by PW800 engines from Pratt & Whitney Canada UTX.N .

It will have the same fuselage cross-section as the Falcon 5X and will fly 5,500 nautical miles (10,200 km), Dassault said.

That is slightly further than the abandoned model which had been due to fly 5,200 nautical miles, or from Riyadh to Tokyo.

COMPENSATION CLAIM

The unusual decision to cancel the French competitor to large-cabin Gulfstream jets from the United States has left a cloud over relations between Safran and Dassault - key partners on French military projects such as the Rafale fighter plane.

Dassault said it is in talks with Safran over claims for compensation over the delays - discussions that two people involved in the process described as "tense," even though the two companies continue to work on other day-to-day projects.

Trappier said Dassault faces an unspecified loss of earnings in the short term over the decision to shut the Falcon 5X.

Safran Aircraft Engines Chief Executive Oliver Andries said on Tuesday there had been problems in getting the high-pressure compressor - the nucleus of a jet engine which increases the pressure of air before it reaches the combustor - to operate throughout the flight 'envelope' required by Dassault.

Addressing this would have required fresh work and delays for the 5X programme. Safran says it is now working to optimise the engine for Textron (NYSE:TXT)'s TXT.N Cessna Citation Hemisphere, the sole remaining Silvercrest customer.

ENGINE STRATEGY

Safran earns most of its income from a four-decade-old joint venture with General Electric (NYSE:GE) GE.N for airliner engines. GE is responsible for the hottest components like the high-pressure compressor, while Safran produces colder components.

Trappier said Silvercrest had been strategically important for Safran as it seeks to demonstrate mastery of the whole design of the latest generation of highly efficient engines, while penetrating a new market for business aviation.

The destiny of the two companies has long overlapped after France opted to develop its own independent Dassault-built Rafale fighter in the 1980s, partly in order to guarantee high-value work for its state-owned engine maker, then called Snecma.

A source close to part-privatised Safran denied it had seen Silvercrest as a strategy to amass know-how, saying it had produced the SaM146 for Russia and combat engines for Dassault.

For his part, Trappier dismissed suggestions that Dassault had cooled to the Falcon 5X, saying the plane had not had any significant problems in flight tests besides the engine delays.

The Falcon 6X will compete in the large-cabin, long-range segment against the Gulfstream G500, which is nearing the end of flight testing, as well as the older Bombardier Global 5000.

Sales of business jets halved from their peak of 1,317 in 2008 as the financial crisis beckoned to 661 in 2016, according the U.S.-based General Aviation Manufacturers Association, but Trappier said last month there were signs at last of a recovery.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.