The aerospace industry is a sovereign, high-tech, performing industry, which is essential for the French economy as it creates prosperity for the country and aggrandizes its international reputation. France’s export success is the evidence that its products own the necessary quality and competitiveness, as more than 75 percent of its consolidated incomes are realized through exportation. This industry profile is a useful tool to help investors understand the emergence of the French aerospace industry, as it aims to analyze the evolution of the sector and the influence of different factors and developments on its existence. The French aerospace industry is divided in six different market segments: civil and military aircraft, helicopters, engines, missiles and UAVS, space and the equipment market for defense and aerospace. The report only focuses on the civil sector of the French aircraft industry since it is responsible for approximately 69% of total revenues. After this short introduction, the sector report is structured as follows: first the actual analysis of the sector, which is based on a SWOT-analysis, then the conclusions and recommendations, followed by the bibliography and appendices. The sources upon which the report is based include more general sources, such as the annual reports of Gifas (“Groupement des Industries Françaises Aéronautiques et Spatiales) and information from the Invest in France Agency but also more specific sources such as the Global Market Forcast developed by Airbus, news articles and publications from McKinsey Research.
2. SWOT- analysis
2.1.1 The aerospace industry is a driver for economic growth and employment
Since 2002, total turnover of the industry has continued to increase. According to the annual report (2007-2008) of Gifas (‘Groupement des Industries Françaises Aéronautiques et Spatiales’) unconsolidated (civil) revenues totaled €17,7 billion in 2002, whereas in 2007 revenues were up to €24,4 billion, which represents a growth of 38,4%. In 2007, 75% of consolidated revenues (civil and military) were derived from exports. Over the past few years the French industry has booked a record breaking number of orders and almost 80% is destined for export. In 2008 the French aerospace industry employed 134,000 people, almost 2,000 more compared with 2007.
2.1.2 The leading players
EADS (Airbus) and Dassault aviation, both world leaders in their field, form the backbone of the French aircraft industry.
The European Aeronautic Defense and Space company (EADS) is the largest aerospace company of Europe and is listed on the CAC 40, the French stock market index. The major and probably worldwide most known component of EADS is Airbus. The company is a leader in civil aircraft manufacturing. According to the Airbus annual review (2008) the company has accomplished a successive delivery increase since 2002. Despite some cash-flow difficulties during 2006 and 2007, the year 2008 was an outstanding year for the company as it booked a record number of sales. In terms of new orders, Airbus had booked 777 aircraft, valued $100 billion, resulting in a market share of 54% ( aircraft above 100 seat). Other important subsidiaries of EADS are Eurocopter and ATR Regional Transport.
Dassault Aviation is a world leader in the manufacturing of exclusive business jets. The Falcon range knows worldwide success with more than 2000 aircraft being sold in over 70 countries. According to the annual report of Dassault Aviation (2007) the company booked a new record of orders (valued €5.38 billion) and deliveries (valued €2.35 billion). The company has been profitable ever since its creation in 1936.
2.1.3 The Airbus A380, giant of the sky
The creation and launch of the world’s biggest plane gave France a major advantage over its most important rival, the American aircraft manufacturer Boeing. The giant can carry 35% more passengers than its closest...
Bibliography: GIFAS, (2008, 9th of July). Industrie Française Aéronautique & Spatiale, rapport annuel 2007-2008. Consulted the 30th of March 2009 at: http://www.gifas.asso.fr/reaxia/files/cyyydsjgw/RA-GIFAS2007-08.pdf
GIFAS, (2008, 2nd of April)
GIFAS, (2008). French Aerospace industry 2008-2009. Consulted the 30th of march 2009 at: http://www.gifas.asso.fr/reaxia/files/ersvtgsv/Gifas-Digest-2008-UK-web.pdf
Dassault Aviation (2008), Rapport annuel 2007. Consulted the 17th of March 2009 at: http://www.dassaultaviation.com/fileadmin/user_upload/redacteur/finance/publications2008/RAinteractif/Dassault_ra_2007_fra/index.htm
Invest in France Agency
Trend Capital (2008, 21st of April), Weak US dollar threatens Europe aerospace industry jobs: ASD. Consulted the 10th of April 2009 at: http://capital.trend.az/?show=news&newsid=1181586&catid=513&subcatid=471&lang=EN
Source: Gifas, annual report (2007-2008)
6.2 Evolution of the US/Euro Foreign Exchange Rate
Source: Economic research, federal reserve bank of St-Louis (2007)
6.4 Evolution of oil prices (1994-2008)
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