Falling dollar may bankrupt European aerospace companies: Dassault Aviation chief
19 Mar 2008
Europe's aerospace industry may face a number of bankruptcies as the euro continues to rise towards $1.50, according to Dassault Aviation CEO and Gifas chairman, Charles Edelstenne. Addressing the French aerospace trade group, Gifas's, annual meeting, Edelstenne said this had to be taken note of inspite of the fact that the French aerospace industry brought in a record €57.5 billion in orders last year.
"$1.60 is unbearable. With a euro at $1.60, some players could go bankrupt," Edelstenne said. The euro traded above $1.58 on Tuesday, having touched $1.5904 on Monday, after fears of more financial turmoil following the bail-out of Bear Stearns, a Wall Street bank.
Edelstenne warned, ''These results hide a very worrying reality. With the euro currently valued at over $1.50, orders are less profitable'' since the aerospace industry sells its products in US dollars. ''Strategies such as currency hedging and raising productivity, which have already been adopted to compensate for the falling dollar, are now no longer enough,'' he added, ''obliging us to move some of our activities abroad.''
The euro's 19 per cent rise against the dollar over the past year is beginning to badly sting Europe's aerospace sector, which employs 132,000 people in France alone.
"The dollar has put such pressure on our profitability that we are no longer masters of our own destiny," Edelstenne said.
French aerospace industry is dominated by Airbus parent EADS, which also has operations in Germany, Spain and Britain, and family-controlled Dassault.
The French aerospace industry added 9,000 full-time, and an equal number of part-time employees, last year, and Edelstenne said it will ''maintain these employment levels'' this year as well. However, ''Pressure from the dollar on our profitability and our ability to self-finance [research and development] is putting our future in danger,'' he concluded.
