NetJets Europe’s order for 24 Dassault Falcon 7Xs reflects a powerful declaration of intent for both companies. For Dassault, the deal–valued at $1 billion–is its largest single business jet sale ever and a vital fillip for the 7X program, which now has an order book for 116 copies of the fly-by-wire trijet. For NetJets’ European subsidiary, the order appears to be a riposte to doubters who have questioned whether the operation can ever stand on its own feet financially.
The two dozen 7Xs are earmarked for delivery to NJE’s Portugal-based operating company, NetJets Transportes Aéreos SA, from the first quarter of 2008 through 2014. NetJets chairman and CEO Richard Santulli said the order represents the largest business jet order ever placed in Europe. Dassault Aviation chairman and CEO Charles Edelstenne said that this transaction will support 2,500 jobs in France and other European countries over the next six years.
Santulli said the 7X order will significantly increase the 20-percent share of the European ultra-long-range bizjet market that NJE currently claims. NetJets started its European operation in 1996 and, after struggling to gain traction, has seen strong sales growth in the past four years. The frax giant’s European fleet stood at 14 jets by the end of 2002, at which point it had 89 customers. By the end of this year, the fleet is set to reach 122 jets serving some 1,250 share owners.
Santulli told AIN he expects NJE to break even this year. “We already have an operating profit and NetJets Europe is no longer a drain on NetJets,” he insisted. This will be encouraging news for NetJets owner Warren Buffett, who in this year’s letter to shareholders of his Berkshire Hathaway investment group admitted that continued losses in the fractional ownership division have been a source of concern.
“Growth in Europe has been slow,” Santulli conceded. “It has taken time to educate the European market about the concept of fractional ownership. There has been real change with the right personnel and in running the operation from Europe rather than directly from the U.S.”
In his view, Europe’s business jet market will take off to an even greater extent next year. He sees plenty of room for growth, since while 90 percent of the biggest U.S. corporations use business aviation, only 10 percent of those in Europe do.
Performance Improvements
John Rosanvallon, president of Dassault Falcon Jet, told AIN that Dassault and NetJets Europe began contract negotiations for the 7X deal two years ago, giving NetJets the opportunity to reserve positions on the assembly line. As of the middle of last month the four 7X test aircraft had collectively made 306 flights totalling 940 flight hours. Speeds up to Mach 0.93 have been achieved and the aircraft has reached a maximum altitude of 51,000 feet.
Type certification of the 7X is now expected during next year’s first quarter, about three months behind the original schedule. Dassault attributes much of that delay to performance updates on the aircraft, including longer range and greater payload.
Before the NetJets Europe transaction, sales of the 7X stood at 92 copies. The next available delivery date for orders taken now is the end of 2010 despite an increase in monthly production from two to three during the second half of next year.
