37, boulevard de Montmorency
75781 Paris Cedex 16
(1) 42 24 24 24
Fax: (1) 42 24 20 93
Incorporated: 1970 as Société Nationale Industrielle Aerospatiale
Sales: FFr 52.3 billion (US$9.46 billion)
SICs: 3721 Aircraft; 3761 Guided Missiles & Space Vehicles
Aerospatiale, a French state-owned company, is one of the world’s leaders in the development and manufacturing of aerospace equipment. The most diversified aerospace company in Europe, its expertise covers civil and military airplanes and helicopters; strategic and tactical weapon systems, including antitank and strategic ballistic missiles; and space systems, launch vehicles, and satellites. Its development of the Concorde in partnership with Great Britain is one of the best known example of Aerospatiale’s commitment to cooperation with other countries. A significant portion of the company’s business is done in such international consortiums as Airbus Industrie, ATR, Euromissile, and Eurocopter SA.
Aerospatiale’s many products and research projects can be divided into four basic categories: aircraft, helicopters, missile systems, and space equipment. The company’s aircraft division, with approximately 14,000 employees, has sales of about FFr 21 billion. As part of Airbus Industrie, a consortium that also includes Deutsche Aerospace Airbus, British Aerospace plc, and CASA, Aerospatiale produces a successful line of commercial jets, the Airbus A300-600, the Airbus A310, A320, A330, and A340. ATR, the company’s cooperative venture with Alenia, supplies such regional transport aircraft as the ATR 42, a 50-seater, and ATR 72, with 70 seats, used by feeder airlines. The aircraft division is also working with companies in Europe and the United States on a successor to the Concorde.
Aerospatiale conducts its commercial helicopter business through Eurocopter SA, a subsidiary owned 70 percent by Aerospatiale and 30 percent by Deutsche Aerospace Airbus (DASA). The world’s leading exporter of helicopters, Eurocopter supplies 120 countries with vehicles for civil and military purposes. Aerospatiale’s space and defense division produces France’s nuclear weapons, both land-based and sea-launched strategic missiles, including the SSBS (Surface-to-Surface Ballistic Strategic) and the MSBS (Sea-to-Surface Ballistic Strategic) systems. In the field of tactical missiles, Aerospatiale is involved in several international projects: Euromissile, a cooperative venture with DASA; EMDG, a partnership with DASA and British Aerospace; and Eurosam, a Franco-Italian grouping with Aerospatiale, Thomson S.A., and Alenia.
Aerospatiale’s space ventures are all done in cooperation with other companies. As a member of Arianespace, Aerospatiale is the “industrial architect” for the Ariane 4 launch vehicles and plays an important role in the development of Ariane 5. The company is also the lead contractor in a number of international satellite programs, including direct television transmission and communications for meteorology and scientific applications. Aerospatiale, Alenia, Alcatel, DASA, and Loral Corp. work together in the world’s leading satellite company.
Incorporated in 1970, Aerospatiale can actually trace its history back to the early days of aviation. Aerospatiale is the product of a long series of mergers in the French aerospace industry that began when eight major companies were nationalized in 1936 and 1937. These companies had been built by pioneers in aviation, including Louis Bleriot, Gabriel Voisin, and Henri Farman. As far back as 1901 Bleriot sketched airplanes, although the machines they depicted would not be manufactured until 1906. Voisin, who initially collaborated with Bleriot, became his major competitor in aircraft manufacturing. Farman, who bought his first plane from Voisin, set several records, including, in 1908, the first one-kilometer closed loop flight. He then founded what was to become a leading manufacturer of aircraft in France.
Competition in the limited market for aircraft was fierce. For example, Bleriot was almost bankrupt in 1909 and saved his company by being the first to cross the English channel in an airplane. Not only did the prize money from the Daily Mail newspaper come in handy, but his instant fame brought in many orders for the Bleriot XI
Aerospatiale’s founding companies benefited in the succeeding years from the Army’s interest in airplanes. The military observed planes in such large-scale maneuvers as the Reims Competition in 1911, in which manufacturers competed to make the aircraft best suited to the military’s operational requirements. Aircraft orders boomed in World War I. For instance, 13 Bleriot SPAD VII and SPAD XIII were made a day, for a total of 13,000 by the end of the war—Bleriot representing just one manufacturer.
After the war, companies began concentrating on the development of commercial air transportation, and the French manufacturers were at the forefront of the industry. In 1918 Farman designed the Goliath, which in the next six years set several world records, including its 1919 two-stage flight from Paris to Casablanca to Dakar, totaling 2200 kilometers. Bleriot supplied Europe’s first airlines with “Berlinés,” and in the 1920s and early 1930s, Potez’s plant was reputed to be the world’s most modern aeronautical facility. Manufacturing flourished in this period, with French aircraft setting records and fulfilling much of Europe’s need for air transportation.
In 1936 the Popular Front Government assumed power and France’s major aviation companies were nationalized. Farman, Hanriot, Potez, Marcel Bloch, Louis Bleriot, Dyle et Bacalan, Loire Nieuport, Liore Olivie, and Dewoitine were combined into six companies according to geographical criteria: the Sociétés Nationales de Constructions Aeronautiques du Centre (SNCAC), du Sud-Ouest (SNCASO), du Sud-Est (SNCASE), du Midi (SNCAM), du Nord (SNCAN), and de 1’Quest (SNCAO). These were reduced to two companies, SNCASO and SNCASE, in 1941.
In 1940, with the signing of the Armistice, France submitted to German occupation. According to the Armistice agreement, aircraft plants were required to manufacture material for the German forces, thus subjecting the manufacturers to Allied bombing. During the war, bombing destroyed aircraft facilities and work tools, holding up development. The U.S. and British aeronautical industries advanced far ahead of the French in the next five years.
When France was liberated in 1945, the aeronautical industry struggled to catch up. Many studies that had been secretly pursued during the Occupation bore fruit and sped France’s return to the level of the U.S. and British industries. For example, the country’s first jet, the Triton, had been secretly developed during the war and was tested only one year after France was liberated. However, their attempts to develop a helicopter were frustrated by mechanical problems and the closing of SNCAC in 1949. With the development of the Djinn by SNCASO in the mid-1950s, the French helicopter industry got its real start, producing 150 units between 1956 and 1960. The French-owned companies also produced several enduring aircraft in this period, including the Noratlas and the Fouga Magis-ter, which were both flown for several decades.
The mid-1950s began a critical period for the companies that were to become Aerospatiale. Their helicopter designs moved to the forefront of the industry when they replaced piston-driven engines with high-capacity turbo engines. The helicopter utilizing these engines, the Alouette I introduced in 1955, and the subsequent Alouette II, sold well both nationally and as an export. The companies also gained ground with their studies in supersonic aircraft, developing the Durandal in 1956. Their experimentation with combined turbo/ram-jet propulsion systems on the Griffon II eventually led to the application of this technology on modern tactical missiles.
This period also saw the beginning of Aerospatiale’s subsequent dedication to cooperative agreements with other countries. After the reconciliation between France and West Germany, the two countries worked together in the tactical missile field, developing the Milan and Hot antitank missiles in the early 1960s. They extended their cooperative endeavors to include the development of the Airbus program. France and Great Britain together pursued the creation of a supersonic transport plane, resulting in the 1969 maiden flight of the Concorde.
Aerospatiale’s immediate predecessors—Sud-Aviation; Nord-Aviation; and SEREB, the Société pour 1’Etude et la Realisation d’Engins Balistiques—had all been formed by the late 1950s from those companies initially nationalized by the French government. SEREB’s initial job was to develop the Strategic Ballistic Surface-to-Surface Missile and the Strategic Ballistic Sea-to-Surface Missile for National Defense. These developments provided a solid base for the implementation of France’s later nuclear policy. In addition, these ballistic studies led to a space launcher program in 1962. The resulting Diamant, successfully fired in 1965, established France as the third leading space developer, behind the United States and the USSR.
In order to eliminate duplication in marketing, customer service, and research and development, the French government decided to merge its three aerospace companies in 1970. It was hoped that the new company, Société Nationale Industrielle Aerospatiale, would increase efficiency and France’s competitiveness in the aerospace industry. Initially, management was reorganized but production remained unchanged. A lack of aircraft orders led to losses three years in a row—$100 million in 1973 alone. These continued losses prompted the government to demand reorganization along departmental lines, creating aircraft, helicopter, missile, and space divisions. Layoffs were also threatened for several years in a row, but major unemployment in France caused the government to hold off. Instead, the government held the company together with a $100 million advance in capital.
Aerospatiale’s performance in the 1970s was held back by a continuing lack of orders for the aircraft division. The Concorde, scheduled to begin service in 1975, had only nine orders in 1973, and those were from the countries sponsoring the aircraft’s development, France and England. Aerospatiale was finding it difficult to market to other countries because cost overruns and environmental problems had raised the price of a Concorde from $15 million to $65 million. In addition, operating costs for the Concorde, already quite high, rose dramatically with skyrocketing oil prices. Interest in the United States was particularly low because the aircraft would not be allowed to fly supersonically over land. Airbus Industrie’s Airbus A 300 B, a twin-engine wide body aircraft, was also in financial trouble because of a low number of orders.
Aerospatiale’s first years were successful ones for its other divisions. The helicopter line was improved with the introductions of Ecureuil, the Super-Puma, and the Dauphin. This division remained profitable during Aerospatiale’s tough times in the 1970s, becoming, in fact, the world’s leading exporter. Aerospatiale also developed plans inherited from SEREB for France’s first strategic nuclear missiles. The company installed 18 land-based SI missiles in 1971. The same year, it introduced its Ml missiles for submarines. Throughout the 1970s, Aerospatiale was improving its missile designs, replacing the S2 with S3 missiles in 1980 and continuing to upgrade its M series submarine missiles. The decade also saw work on the Exocets, a series of antiship missiles to be launched from surface ships, combat aircraft, coastline battery, or submarines.
France’s space programs had suffered from cuts and delays because of a lack of funds in the late 1960s, a situation the country hoped to solve with the creation of Aerospatiale. Indeed, Aerospatiale played a major role in the European space cooperation that began in 1972. The company became the industrial architect of the Ariane space launchers, first successfully fired in 1979, and the prime contractor for several satellite programs.
In 1973 the French government gave Aerospatiale emergency financial support in the form of government guarantees for a $26 million public bond issue. Despite this aid and the strong performances of the helicopter, tactical missile, and ballistic systems divisions, the company still registered losses in 1974 and 1975.
“We are dying a slow death,” Andre Gintrand, financial vice president of Aerospatiale, lamented in Business Week in 1974. “With the American competition in the market, we can’t breathe.” President Charles Cristofini felt more transnational aircraft would help fight the U.S. aircraft leaders by encouraging more national airlines to buy European products. Aerospatiale was also competing with Avions Marcel Dassault-Breguet Aviation for military contracts and felt that the government was favoring Dassault.
Aerospatiale’s aircraft division continued their policy of forming international cooperative ventures. They joined forces with Alenia in 1982 to form ATR. The company created the ATR 42, a small regional transport aircraft and, later, the ATR 72.
The company also continued to work with British Aerospace, forming plans in the mid-1980s for a second generation Concorde, although evaluating its feasibility was expected to take years. Airbus Industrie expanded its line and soon offered a large series of commercial aircraft. Orders gradually improved during the 1980s; in 1989 aircraft orders totalled over 39 million francs, and in 1990 Airbus Industrie had 1250 firm orders for A300s, A310s, and A320s.
Aerospatiale’s other divisions continued to expand throughout the 1980s. The helicopter division maintained its position as the world’s leading exporter and, in 1988, had the biggest market share in the civil sector in the United States, where the company has a subsidiary. Its space division was at the forefront of European space technology, suggesting and studying the feasibility of such projects as an unmanned space station and a small winged space shuttle-type vehicle called Hermes. Aerospatiale remained a prime contractor for the European Space Agency’s Ariane family of launch vehicles and became the head of the ESA team charged with building Hermes, production of which was delayed by a ministerial conference at the end of 1992.
In 1990 France and Britain began a three-year study into the commercial and technical feasibility of a second generation supersonic transport. The study was to examine the ATSF (Future Supersonic Transport Aircraft), and a hypersonic aircraft, the AGV (High-Speed Aircraft), which would fly 12,000 to 15,000 km at Mach 5, but would not require passengers to have astronaut training. In theory, the ATSF could be in service by 2005, and the AGV by 2030 to 2040, but both would need broad-based international cooperation to make development feasible. There were many problems to overcome, including the assurance of a market for 400-500 aircraft.
In 1991 Aerospatiale and Italy’s state-owned Alenia made a bid for De Havilland, an ailing Canadian subsidiary of Boeing Co. The European Commission, a decision-making body of the European Community (EC), did not allow the deal to go through, however, arguing the venture would have a “dominant position,” giving the two companies together a 50 percent share of the world market and 65 percent of the EC market for commuter planes with 20 to 70 seats.
The next year Aerospatiale, DASA, and Alenia were planning a new consortium called Regioliner, which would produce a 120-seat jet by 1996. Many companies saw the market for a new generation of small jet aircraft that could be used for short routes, but lacked the money to develop them. The companies were hoping for government funds to help start them on this proposed $2.5 billion project.
Aerospatiale’s creation of new subsidiaries and cooperative ventures accelerated in the early 1990s, as it attempted to distribute the burden of research and development and receive the benefits of governmental subsidies from several nations. In 1990 Aerospatiale, DASA, Alenia, and Dassault, formed a single company, Euro-Hermespace to oversee the development and production of the Hermes spaceplane. France provided funding for a 43.5 percent share of the company; the country’s interests were then to be administered by a new company, Hermespace France, owned jointly by Aerospatiale, with 51 percent, and Dassault, with the remainder. However, Hermes and the Columbus space station encountered financial, political, and management problems in the early 1990s. While the ESA evaluated the cost of the station and waited to see what NASA did with their plans for a space station, a ministerial conference decision delayed the production of Hermes in 1992. Eventually, the Hermes program was postponed indefinitely, and Euro-Hermespace was dissolved.
In 1991 Aerospatiale and DASA merged the commercial operations of their helicopter divisions. The new company, Eurocop-ter Holding, is owned 60 percent by Aerospatiale and 40 percent by DASA. However, Eurocopter SA, which directs the activity of the French and German helicopter divisions, is owned 75 percent by Eurocopter Holding and 25 percent Aerospatiale directly. Before the merger, Aerospatiale held 33 percent of the world helicopter market, based on sales from 1985 to 1989, whereas MBB held only 8 percent. Revenue from the two helicopter divisions equaled about $1.6 billion in 1990. The new company will combine sales, service, and support operations.
With the end of the cold war, many military contractors were threatened with budget cutbacks and program cancellations. Most of Aerospatiale’s international projects, including the Aster surface-to-air system and their third generation of antitank weapons, were going forward in the early 1990s. However, the backlog of missile orders dropped and that area of business activity was hurt by the cancellation of the S-45 strategic missile program and the Hades short-range nuclear missile. Aerospatiale was forced to cut 1,145 jobs in 1992.
The downturn in the global market in the early 1990s increased the complaints by the United States and others that subsidies and non-tariff barriers gave Aerospatiale an unfair advantage in the world market. Jacques Balazard, vice president of research and development, claimed in Design News, “Such phenomena … are less marked in Europe than in many other regions.... If you consider the very large proportion of U.S.-made aircraft in European airlines, you will undoubtedly acknowledge that the U.S. industry does not suffer from these alleged barriers.”
In 1992 Credit Lyonnais, a state-owned French bank, acquired 20 percent of Aerospatiale from the French government. Thus, Aerospatiale increased its capital, enabling the company to reduce its debt and finance new investments.
Seca; Socata; Sogerma-Socea; Euro-copter Holding (60%); Eurocopter SA (25% held directly, Euro-copter Holding holds an additional 75%); Euromissile (50%); ATR (50%); Airbus Industrie Group (37.9%); Sextant Avionique (50%); Unilaser; Aerospatiale, Inc. (U.S.A.); Aerospatiale Canada Inc.; Aerospatiale UK Ltd.
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—Susan Windisch Brown