Dassault Moves Towards
Informal Split of Civil, Military Businesses

Having previously been forced to abandon the planned demerger of its civil and military aircraft businesses, Dassault Aviation is now pursuing a renewed "informal split" in an attempt to cut its operating costs. Much-touted plans to divide the company failed in 1999 when key shareholder Aerospatiale refused to agree to the move.

But Aerospatiale's subsequent merger with Matra (forming Aerospatiale Matra) changed the nature of its 45.7% holding in Dassault, and opened up the way for the French fighter maker to chart its own course. Dassault now has the option of declaring a unilateral split with AerospatialeMatra, following the latter's move into the EADS consortium last year. Following this move, AerospatialeMatra must now either sell its stake back to Dassault or give up the power to make strategic decisions as part of Dassault Aviation.

"If we wanted to force things we could do it todaybut it's in our interests if we consult with our shareholders," says Dassault financial and economic affairs VP Charles Edelstenne.

Dassault is keen to divide its military and executive jet units to take advantage of increased activity in the civil aircraft sector, which is now driving company profits. Military aircraft boosted Dassault's 1998 revenue after a hard-won sale of Mirage 2000-5s to the UAE. However, 1999 results were down by 15% overall and military sales represented only 32% of total turnover. 1999 military sales represented just 5% of total orders, down from 44% the previous year, though Dassault did finally secure an essential French government order for an initial batch of 28 Rafales. Dassault says military sales will climb to 40% of total turnover in 2000.