Are Airbus, Dassault, Safran And Thales Being Forced To Aid Suppliers?

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Please explain how Airbus, Dassault, Safran and Thales are being “forced” to support their smaller suppliers?

Aviation Week France Bureau Chief Thierry Dubois responds:

The French government’s COVID-19 bailout package is unprecedented in several ways, including the creation of a funding plan that hinges on the industry’s cooperation. The survival of a number of small and medium enterprises (SME) is at stake. Many of these suppliers invested heavily before the crisis to support aircraft production ramp-ups by original equipment manufacturers but are now are under threat of bankruptcy due to production cuts.

To support ailing SMEs, a dedicated investment fund is being formed this summer to provide them with equity capital. The fund may also be instrumental in the overdue consolidation of the supply chain. Airbus, Dassault Aviation, Safran and Thales (France’s Big Four) will capitalize the fund with a combined €200 million ($226 million). After what were probably difficult negotiations, Airbus is contributing €116 million;, Safran, €58 million; Dassault, €13 million; and Thales, €13 million. The French government is adding €200 million and will soon issue a request for proposals to find a managing company for the fund. It will contribute an additional €100 million, making an accumulated €500 million available from the start. The fund itself is planning to raise an equivalent amount, bringing the total to €1 billion.

The creation of such a financial partnership is the first time France’s Big Four have pooled resources to support the industry as a whole. But Airbus, Dassault, Safran and Thales will reap benefits. First, their contributions should help prevent key suppliers from going belly-up. Second, they may expect a more robust supply chain thanks to consolidation. A mission of the fund is to create a small number of larger companies, each focused on a category of components or processes.

The government’s plan also creates an employee exchange program. An OEM suffering from low workload may send technicians or engineers to an SME. The latter would use the OEM’s expertise to improve its own skills.