Aerospace Support Plan: for a Green and Competitive Industry
(Source: French Government; issued June 9, 2020)
(Unofficial translation by Defense-Aerospace.com)
The COVID-19 health crisis brought a very serious and brutal end to air transport around the world. In the space of a few weeks, the world’s airlines, which had been growing, faced financial difficulties and a loss of turnover which could exceed € 280 billion in 2020 alone, jeopardizing their very survival. This crisis also puts at risk orders for new aircraft as well as their maintenance and manufacturing of spare parts.
There are direct consequences for companies in the French aerospace sector, which represents 300,000 jobs and € 58 billion in annual turnover, which was already partly affected by the B737 MAX crisis. Airbus has announced a reduction of approximately 35 to 40% in the production rates of its main programs. As an industry with long production cycles, these rate reductions by major manufacturers translates into sub-contractors at a standstill or at very low activity levels.
The recovery should be long: current forecasts for air transport do not anticipate a return to the pre-crisis level before 2023. Previous crises have shown that the impact on the aeronautics industry is even more lasting.
Beyond this crisis, the aerospace industry faces the unavoidable challenge of ecological transition. The air transport sector worldwide is characterized by growing emissions in terms of greenhouse gases. The impact of the present crisis is not yet known, but it is likely that the structural growth observed in recent years will continue. Air transport is an important vector of economic development, and the means deployed during the crisis (air freight of medical equipment, medical transport of people) demonstrated the relevance of the aerospace in times of crisis.
It is therefore necessary to embark resolutely on a road map to reduce greenhouse gas emissions in France and in the world so as to halve them by 2050 compared to 2005.
The French and European aerospace industry has a central role to play in the decarbonization of world air traffic. The Airbus fleet represents around 45% of the world’s fleet of medium and long-haul aircraft, and Safran powers more than 70% of medium-haul aircraft worldwide.
Supporting the French aeronautical industry is therefore essential for the long-term reduction of CO2 emissions from air traffic.
The aerospace sector is present in all French regions, and it has a very marked territorial footprint in certain territories, especially in the Occitania, Ile de France and Nouvelle-Aquitaine regions. In Occitania, it represents around 90,000 jobs, or almost 40% of industrial employment there.
This crisis should not jeopardize the know-how of this industry of excellence or affect its ability to rebound and innovate, especially since the continuity of technological progress is at the core of its success. Any slackening in this matter would result in job transfers and a loss of market share over time.
To achieve this, it is necessary to preserve the skills that are so difficult to acquire and to prepare for the recovery. It is also necessary to continue the efforts made to improve the competitiveness of the French supply chain and to design future generations of aircraft, which will be even more respectful of the environment.
In view of the current crisis and the pressures weighing on companies in the sector, this support must be massively increased. We will do everything to support this French industry, which is critical for our sovereignty, our jobs and our economy.
We will act in three directions with a single objective: to produce the clean planes and helicopters of tomorrow in France in order to remain a leading aeronautical nation in the world.
1st direction: respond to the emergency by supporting companies in difficulty and protect their employees
In order to ensure support for all businesses in the sector and to avoid defaults, the aid provided from March will continue to be available, in particular with regard to loans guaranteed by the State and the evolution of the partial employment system.
In addition, export guarantees will prevent cancellations and postponements of aircraft orders, and public orders by the military, civil protection service and Gendarmerie will bring immediate relief for the entire sector.
2nd direction: invest in SMEs and mid-caps to support the sector’s transformation
We will invest alongside large manufacturers to strengthen SMEs and mid-caps, make them grow, modernize production chains, and make them more competitive (robotization, digitalization, etc.) to enable them to take part in the next technological revolutions in the sector.
Two tools will be used:
-- The first will be endowed with 500 million euros in capital from July, making it possible to reach € 1 billion in financing capacity in the long term, to intervene in equity and promote the development and consolidation of companies in the sector.
-- The second will mobilize 300 million euros in subsidies to support suppliers and subcontractors in the sector in their transformations and their move upmarket.
3rd direction: invest to design and produce tomorrow's aircraft in France
Very significant financial resources will therefore be concentrated on R&D for future aircraft with low carbon emissions.
€ 1.5 billion in public aid over the next three years will be invested to support R&D and innovation in the sector. Endowed with 300 million euros from 2020, its objective is to make France one of the most advanced countries in clean aircraft technologies, by preparing the next technological breakthrough, by continuing to work on reducing fuel consumption, appliance electrification and the transition to carbon-neutral fuels such as hydrogen. This action will thus consolidate the leading position of France and Europe in aerospace, and also to leverage the decarbonization of the world aircraft fleet, thus playing a preponderant role in the fight against climate change.
This massive support from the State is accompanied by commitments from companies in the sector and in particular from main contractors on relations with their subcontractors and on the ecological transition.
In total, this plan will represent more than 15 billion euros in aid, investments and loans and guarantees. It was closely coordinated with GIFAS (French aerospace industry trade association—Ed.), its president Eric Trappier and all the manufacturers whom we would like to thank for their commitment.
It gives a clear direction for the French aeronautical industry: to produce in France in 10 to 15 years the aircraft which will place air transport on a trajectory compatible with the ecological transition and the objectives of the Paris Agreement.
Remarks by Florence Parly, Minister of the Armed Forces
(Source: French Armed Forces Ministry; issued June 9, 2020)
(Unofficial translation by Defense-Aerospace.com)
Below are extracts from the June 9, 2020 speech by Florence Parly, Minister of the Armed Forces, on the presentation of the aerospace support plan.
"To support sector companies, the Ministry of the Armed Forces will operate two levers:
-- The first will be 600 million euros in military orders that we have decided to accelerate.
In the context of this unprecedented health crisis, we have taken steps to advance orders that were originally planned later in military programming.
All of these orders meet existing operational needs of our armed forces: we are just going to move faster. This anticipation will allow us to save over 1,200 jobs for 3 years, all over France. Half of these orders will benefit subcontractors to major manufacturers.
I also expect our industrial partners to offer fair prices. The time is not for profit, it is for maintaining employment. And I’ll make sure of it.
-- The second lever of action is mainly aimed at SMEs and defense nuggets, and concerns our ability, at the Ministry of the Armed Forces, to take equity stakes in companies. We are therefore working to double the Definvest investment fund from 50 to 100 million euros over a period of 5 years. 100 million euros to save companies of strategic interest for our defense by capital endowments. The Definvest fund will of course act in close collaboration with the fund whose creation was announced this morning."
Military, Civil Protection and Gendarmerie Orders
(Source: French Government; issued June 9, 2020)
(Unofficial translation by Defense-Aerospace.com)
French aerospace industry is characterized by strong synergies between civil activities and military, at the main contractor level as well as for equipment manufacturers and subcontractors.
The military aerospace industry has its own specificities, with combat aviation, mission aircraft (tactical transport, surveillance and intelligence) and combat helicopters, but they are closely linked and developments specific to military activities often find their way into the commercial field a few years later.
Preparing for the future is the core mission of the Armed Forces Ministry’s Directorate-General of Armaments (DGA), and in this regard the Future Air Combat System or the Medium Altitude, Long Endurance (MALE) drone being jointly developed in cooperation with several European countries are a good illustration. These very long-term investments presuppose a healthy national industry, and it is therefore necessary to help the aerospace sector pass the current difficulties by preserving its skills and its industrial capabilities, which are essential to our strategic autonomy.
We will very concretely support the sector’s workload by bringing forward orders for aircraft, helicopters and military drones, there providing crucial and immediate support to preserving employment, particularly in SMEs and mid-caps.
The total amount of these advance orders will be € 832 million.
Bring forward the planned order for three Airbus A330 Phoenix Multi-Role Tanker Aircraft (MRTT). This aircraft is based on the airframe of the Airbus A330 commercial aircraft. They will replace the Air Force’s A310 and A340 aircraft, whose average age is 34 and 25 years respectively.
Manufacture of an A330-MRTT involves four Airbus sites in France (Toulouse, Saint-Eloi, Nantes and Saint-Nazaire) and the entire subcontracting chain (Daher, Latécoère, and many other SME and ETI).
This measure will preserve the equivalent 100 jobs for 2 years. It will allow to bring forward the retirement of the A340 (2020 instead of 2028) and A310s (2021 instead of 2023).
Bring forward the planned order of a light surveillance and intelligence aircraft (ALSR). This aircraft is equipped with optronic, radar and electromagnetic sensors for intelligence gathering.
The basic civilian aircraft is completely transformed by Sabena Technics and Thales with the contribution of many SMEs and mid-caps (Ecrin, Aquitaine electronics, Arelis, Avantix, Elvia, NSE, Reflex, Protoplane, SERTA, AT Aerospace, Dormeca, Examéca Aerotube, Micro-South etc.)
This order will preserve the equivalent of 150 jobs for two years.
Bring forward the planned order for eight H225M Caracal helicopters for the Air Force. Specialized in combat rescue operations, the H225M Caracal are deployed many in external operations, especially in the part of Operation Barkhane. They will replace the Air Force’s Puma medium helicopters, which are one average 43 years old.
The H225M is assembled at the Airbus Helicopter plant in Marignane, whose activities are highly impacted by the crisis, and its manufacture also involves engine production by Safran Helicopter Engines as well as SMEs and mid-caps such as Mecachrome.
These 8 helicopters ordered will preserve the equivalent of 960 jobs over 3 years.
Measure 4: Bring forward orders for naval surveillance drones.
Aerial drone systems (SDAM) and on-board mini-drones (SMDM) for the Navy provide surface vessels with identification and intelligence capabilities that supplement on-board helicopters.
For SDAM, the Cabri G2 light helicopter produced by the Guimbal SME is adapted to military needs and to the marine environment by NavalGroup and Airbus Helicopters.
SMDM systems are supplied by the SME SurveyCopter.
This measure will preserve the equivalent 15 jobs for 2 years.
Measure 5: orders for Civil Protection and Gendarmerie Helicopters
The order for two new-generation EC-145s costing € 32 million will be brought forward. They will partially compensate the loss of four aircraft following accidents.
The order for ten H160s for a total cost of € 200 million will also be brought forward. They will replace part of the fleet of 26 AS350 Ecureuils of the Gendarmerie Nationale by more versatile aircraft, as part of a policy to rationalize the overall fleet.
These 12 helicopters ordered will preserve the equivalent of 640 jobs for 3 years.
Aerospace Recovery Plan: GIFAS salutes the government’s ambitious recovery plan
(Source: GIFAS; issued June 9, 2020)
PARIS --- Faced with the COVID-19 pandemic and its unprecedented consequences on world air traffic, the French aerospace industry has been in an existential crisis for several months. It is experiencing an unprecedentedly violent reversal of the situation, jeopardizing the very survival of this strategic sector of excellence, bringing together 200,000 people in more than 400 companies, from major contractors to small and medium-sized enterprises.
From the beginning of this crisis, the entire aerospace sector, whether through GIFAS or directly through its member companies, was mobilized, committing all of its forces to the service of its employees, customers and the entire country.
However, given the scale of this crisis, the need to prepare for the post-crisis have led GIFAS and its President, Eric Trappier, to propose to the Government, on behalf of the sector, various measures for survival and safeguard measures. These constitute the essence and the heart of the recovery plan announced today by the Government.
GIFAS welcomes this ambitious recovery plan based on the following axes:
-- The short-term survival of the sector: extension of the measures already taken by the State and new measures of tax relief and financing of excess stocks to protect the short-term cash of the most vulnerable companies.
-- Maintaining key jobs and skills: enroll in the long-term partial employment process in order to be ready to restart after the crisis.
-- Supporting demand through the State’s export guarantees, enabling airlines to continue modernizing their fleet.
-- Creation of an investment fund by the four main manufacturers and the State to promote an investment vehicle intended to support, strengthen and develop French companies in the aerospace sector weakened by the current health crisis.
-- The digital transformation of the sector: mobilization of a fund by the State to support the digital transformation of SMEs and mid-caps in the sector.
-- Preparing for the future: CORAC has designed an R&T and R&D program to speed up research and preparation for green, connected and digital aircraft for the beginning of the next decade, with a new vision encompassing different market segments and involving the entire industry in this innovation process.
-- The establishment of a behavior charter: to facilitate and streamline the relationship between principals and suppliers to protect the activity, in the overall interest of the sector.
The President of GIFAS, Eric Trappier, Chairman and CEO of Dassault Aviation, said: “This plan is ambitious and historic. We salute it, and are delighted by this comprehensive and coherent support from the State for the strategic and excellent aerospace sector. This applies in particular and especially to its supply chain of subcontractors and SMEs, so crucial at a time the sector is playing for its survival. The plan announced today is a founding act of the post-crisis industrial France as it reconquers its future."
Founded in 1908, the Groupement des Industries Françaises Aéronautiques et Spatiales (GIFAS) is a professional union that brings together more than 400 companies - from the prime contractors and OEMs to SMEs. GIFAS represents a profession whose 2018 turnover is € 65.4 billion, with 85% of consolidated export turnover, and directly employs 195,000 people.
Every two years, GIFAS organizes the Paris-Le Bourget International Exhibition of Aeronautics and Space, the first global event of its kind. The 54th Air Show will take place from June 21 to 27, 2021.
(Source: Dassault Aviation; issued June 9, 2020)
SAINT-CLOUD, France --- Dassault Aviation fully supports the government's recovery plan for the aviation industry announced today at the French Ministry of Economy and Finance.
This plan provides crucial assistance to the French subcontracting chain, which has been severely impacted by the Covid-19 crisis.
With over 10,000 military and civil aircraft delivered in more than 90 countries over the last century (including 2,500 Falcon), Dassault Aviation has built up expertise recognized worldwide in the design, development, sale and support of all types of aircraft, ranging from the Rafale fighter, to the high-end Falcon family of business jets, military drones and space systems. In 2019, Dassault Aviation reported revenues of €7,3 billion. The company has 12,750 employees.