Dassault goes it alone with Mirage

Just over three-year ago, French aircraft magnate Marcel Dassault invested in a highly dangerous multimillion-dollar gambit that he hoped would enable France to maintain a competitive foothold in the international military aviation arena.

Lacking government support but with financial help from Saudi Arabia the aircraft manufacturer independently set about constructing the Mirage 4000, Mr. Dassault's new "Avion de Combat Futur" (ACF) and its answer to the firm's main competitor, McDonnell Douglas's F-15.

Mr. Dassault's move was in response to French President Valery Giscard d'Estaing's decision in December 1975 to scrap official plans to support the ACF at $17 million to $20 million each. The government considered the twin-engined, delta-winged Mirage 4000 too expensive. It was also too sophisticated for France's own defense needs. Instead, it chose Mr. Dassault's other new plane, the cheaper single-engined Mirage 2000, as its standard fighter for the 1980s.

Considered one of the most daring gambles in modern aviation history, Mr. Dassault's decision to go it alone risks commercial disaster if it fails.

But the 88-year-old aircraft manufacturer realized that if he could not produce a followup to his highly successful Mirage III and F-1 fighters, he would no longer be able to compete with the Americans and Soviets in years to come. He would also be forced to lay off his prized team of aircraft designers, a step that would spell ruin for the firm's renowned innovative and creative ability.

In March 1979 Mr. Dassault was ready with the first Mirage 4000 prototype. Later, his pilots gave the plane its first public debut at the June Paris Air Show in which more than 650 companies from 25 countries exhibited.

Publicitywise, the plane was a huge success. But so far the Avions Marcel Dassault- Breguet Aviation has not sold any of the planes. "Our main problem is to remain competitive with the Americans," said one company spokesman. "But we are confident that we'll start selling soon."

Mr. Dassault feels his best chance for making the Mirage 4000 justify its massive investment and risk is by concentrating on the Middle East. Two-thirds or France's oil originates from Iraq, Saudi Arabia, and the Gulf emirates, which has encouraged the Paris government to cultivate a pro-Arab policy.

Although the American F-15 sells for $12 million each, at least 25 percent cheaper than his own plane, Mr. Dassault may have much to gain from US and Soviet political difficulties with third-world buyers. The Chinese, for example , expressed a strong interest in the plane early last year.

But if sales have not begun rolling yet with the Mirage 4000, Mr. Dassault seems to have less to worry about with sales of his other planes, although he admits that the competition is severe.

Last year, the Dassault-Breguet (the two companies merged in 1971), which employs 15,000 designers and workers throughout France, chalked up record sales worth 13.5 billion francs ($3.4 billion).

This was a significant improvement over the slight slump in sales (10.5 billion francs or $2.6 billion) in 1978. It was even a noticeable jump over the 1977 record year when the firm placed 12.5 billion francs ($3.1 billion) worth of orders.

With 90 percent of the company's business in military planes, Mr. Dassault has to rely heavily on exports. His Mirage III has done well in the past with sales to 23 countries. his Mirage F-1 is still proving itself but has been gaining important sales. In july 1977 for example, Iraq bought 26 F-1s. In December 1978 it ordered another 24.

Production is expected to increase over the next two years. However, Mr. Dassault recently was disappointed when his Mirage 2000 lost out against the F- 16 of General Dynamics and the F-18 of McDonnel Douglas on the Australian market. The Canberra government, which is hunting for a total of 75 new fighter planes to refurbish its aging Mirage III Air Force, is expected to decide between the two American contenders later this year.

Despite the French government's compensatory order of 185 Mirage 2000s, Mr. Dassault was particularly upset that he been defeated by the Americans. Still fresh in his memory was his failure to clinch the so-called fighter "deal of the century" in 1975 over the F-16 in Norway, Holland, and Belgium, resulting in more than 350 lost sales. Furthermore, he had hoped to retain Australia within his market area. In 1960 the Canberra government had opted for the Mirage III over the American F-104 Starfighter.

In 1965 Mr. Dassault began trying to reduce his dependence on the military market by entering the business-jet sector. He emerged with his successful Mystere 20 and Mystere 10. Half the Mystere 10s are sold in the United States but under the Falcon brand name.

Dassault's more recent three-engined Mystere 50, which can fly from Paris to Chicago without refueling, also promises to firmly establish itself as a top-class business jet. TAG, the Middle East executive airline, has already ordered 20 planes.

The continued survival and success of the independently minded aircraft manufacturer, magazine owner, and more recently, film scriptwriter -- he wrote a movie about a teen-age girl falling in love with her teacher -- is attributed to his shrewd market stategy.

Not only has he managed to obtain government guarantees for 76 percent of his exports but has also reduced overhead by subcontracting to France's other major airplane construction corporation, Aerospatiale. France's nationalized aircraft firm is none too pleased about this arrangement, but with construction contracts in short supply to keep its work force employed, it has no other choice. By participating in the manufacture of Dassault's Falcon 20 and Mirage F-1, Aerospatiale loses more than 200 million francs ($50 million) a year.

Mr. Dassault has also avoided government management of his affairs. In 1977 the United Left political parties called for the nationallization of his 13 aircraft enterprises and factories. When the communist and Socialist coalition failed to take power, Prime Minister Raymond Barre still found himself pressured into taking some form of participation in Mr. Dassault's corporation.

In 1979 the government regrouped 20 percent of Mr. Dassault's holdings with 25 percent of Aerospatiale, which is fully owned by the government, to form a separate company in sort of reorganization of the aeronautics industry.

But this appears to have had little effect on the owl-faced little aircraft manufacturer. He doggedly remains in full control.