(BFM Bourse) – According to La Tribune, the Saudi kingdom asked the aircraft manufacturer to send it a costed proposal for a potential order of 54 Rafale fighter planes. But the path to a firm order seems uncertain.
Will the difficulties of the Eurofighter Typhoon (the aircraft of the consortium of Airbus, BAE Systems and Leonardo) benefit Dassault Aviation and its Rafale?
In any case, Saudi Arabia would be interested in the fighter plane of the group founded by Marcel Dassault. According to information from La Tribune published on Sunday, Riyadh asked the company to send it a costed proposal for the acquisition of 54 Rafale. The aircraft manufacturer would have until November 10 to respond.
Contacted by BFM Bourse, Dassault Aviation management did not wish to comment.
On the Paris Stock Exchange, Dassault Aviation shares rose 2.5% around 10 a.m. to 186.60 euros, marking one of the largest increases in an amorphous SBF 120 (-0.08% at the same time).
“At this stage, we consider a Rafale order by Saudi Arabia to be unlikely and largely unanticipated. If confirmed, it would represent another significant victory for the Rafale consortium, including Thales and Safran,” Jefferies believes.
Thales and Safran gained 1% and 0.4% respectively. The on-board electronics supplied by Thales represent between 20% and 25% of the total value of the fighter plane. Safran, for its part, supplies various equipment for the Rafale such as M88 engines, cabling, landing and braking systems, etc.
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Support for production rates?
In addition, this Rafale order could possibly support the ramp-up of production. This would also justify discussions on increasing production to 4 per month instead of the current planned maximum of 3 months (already effective in the early stages of production and expected to be reflected in rollouts from final assembly around 2026)”, notes Jeffeires.
The fact remains that between the making of contact reported by La Tribune and the signature in due form of a contract, the progress is still high. The media recalls that Riyadh has been waiting for almost a decade for a second Eurofighter order for 48 units. But, as sometimes in a European consortium, one of the countries, namely Germany, blocks this second order which has caused friction between London, Berlin and Riyadh.
“The fear is to see the Rafale playing the simple role of the hare to the benefit of the Typhoon, or even the F-15,” underlines La Tribune. The media also explains that the Americans may well not let the Rafale enter this market. And what’s more, Riyadh’s sudden interest in the fighter plane could lead Berlin to soften its position “if Riyadh intervened in favor of the German hostages held by Hamas in Gaza”, notes La Tribune.
A recent rise in the stock
In any case, this press information currently carries a title which has clearly gained ground in recent times. Over three months, the price increase amounts to 9.5%, completely reversing the decline of the SBF 120 (a drop of more than 8% over the same period).
The action was supported by risk aversion which benefited defensive stocks of which defense groups are a part. But also by the renewed tensions in the Middle East with the war between Israel and Hamas.
“Prolonged conflict in the Middle East could impact demand for military equipment. Historically, Israel has sourced equipment from the United States, but has also produced its own equipment. Neighboring countries, on the other hand, have sourced both from the United States and other sources, including European defense players,” Deutsche Bank explained in a recent note.
“In this context, BAE Systems, Leonardo and Dassault Aviation could be best placed to obtain new (contract editor’s note) gains, while Thales and Hensoldt could benefit from certain commercial opportunities,” added the German bank.
Julien Marion – ©2023 BFM Bourse
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