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France Plans Dassault Combat-Jet Review Amid Export Hopes

Aug. 2 (Bloomberg) -- France will review how many Dassault Aviation SA Rafale combat jets it buys in 2015 as the government looks to export deals to sustain production.

An order from India is all but assured and one or two more export buyers will sign on as Brazil, Malaysia, the United Arab Emirates and Qatar show interest, said French defense officials, who asked not to be identified. Dassault was named preferred bidder in India to supply at least 126 jets.

The French government, eager to cut defense costs, has been trying to help Dassault secure export orders to share the burden of building the 11 Rafales each year needed to sustain production. A defense white paper unveiled by the government in April trimmed the total combat aircraft force to 225 planes from 300 in a previous planning document.

France will pare its planned deliveries to 26 Rafales between 2014 and 2019 under a new budget plan to be approved by the cabinet today in anticipation of foreign commitments, one of the defense officials said. The initial batch of planes for India would be built in France, with final assembly then shifting overseas.

France faces competition for some of the commitments. BAE Systems Plc Chief Executive Officer Ian King said yesterday the company is pursuing exports of the Typhoon combat jet in the UAE and Qatar as well. Lockheed Martin Corp., the world’s largest weapons maker, is also in talks with the U.A.E. to increase a purchase of F-16 combat jets.

Job Cuts

Annual defense spending in France will average 31.4 billion euros ($41 billion) a year through 2019, with 17.1 billion euros earmarked for equipment spending, financing the purchase of helicopters and transport planes made by Toulouse-based European Aeronautic, Defence & Space Co., soon to be rebranded as Airbus.

The budget calls for 23,500 positions to be cut between now and 2019 in France’s all-professional army. Combined with 10,175 job cuts decided on by the previous government of President Nicolas Sarkozy, the French military will have 242,000 personnel in 2019.

“The budget has been maintained, but within that budget we had to set priorities,” Defense Minister Jean-Yves Le Drian said today in an interview on Europe1 Radio.

About one-third of the jobs cuts will be of operational troops and two-thirds among support and administrative staff, French military officials said. The number of special forces will be increased by 1,000.

Equipment Plans

France is seeking to take delivery of 12 armed Reaper drones in the period covered by the budget and remains in talks with the U.S. government over how unmanned aircraft built by San Diego-based General Atomics Aeronautical Systems Inc. can be adapted to local requirements. The government also wants to buy 14 shorter-range drones, the officials said.

The spending plan also confirms plans for France to start buying 12 refueling planes from next year with the first two to be delivered in 2019. By then, the French air force should also receive 15 A400M military transports from Airbus, with the first now entering service.

Other equipment deliveries projected during the five-year plan include one Barracuda attack submarine built by French naval yard DCNS, owned partly by Thales SA, 42 NH90 troop transport helicopters and 16 Tigre attack choppers.

A new M51 submarine-launched intercontinental ballistic missile is also due to be delivered, the officials said. The French bill to sustain its nuclear deterrent force is about 3.4 billion euros each year.

To contact the reporters on this story: Robert Wall in London at rwall6@bloomberg.net; Gregory Viscusi in Paris at gviscusi@bloomberg.net

To contact the editor responsible for this story: Benedikt Kammel at bkammel@bloomberg.net

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