PARIS — Dassault Aviation has reported 2016 financial results signaling Rafale fighter export deals underpinned the aircraft company, even as weaker sales of its Falcon business jets dented orders, revenue and earnings.


Such is the softness of the business jet market and stiff competition from North American rivals Gulfstream Aerospace Corporation and Bombardier, Dassault expects to cut hundreds of staff through a voluntary program, offering a financial package to those who opt to leave.


"Sales will increase in 2017 compared to 2016," Dassault Chairman and CEO Eric Trappier told a news conference. The company plans to deliver this year one Rafale to the French Air Force and eight to Egypt.


A first delivery to Qatar is due toward the end of 2018, India in mid-2019 and further shipments to Egypt, which has already received six units, Trappier said.


Dassault last year started an announced plan to double the rate of Rafale production to two units per month to meet contracts with Egypt, Qatar and India. The production line at Mérignac, southwest France, is closed in August for the traditional month's holiday, so annual output will rise to 22 units. Building a Rafale takes three years.

Monthly output will later fall to 1.5 units after the present "intense production," Trappier said.


The French Defence Ministry assumed €4 billion (U.S. $4.2 billion) of Rafale exports would be awarded when the present multiyear defense budget was drafted, procurement chief Laurent Collet-Billon said March 6, and major domestic programs would have been delayed in the absence of foreign deals.


Egypt paid a higher estimated average price for Rafales than that paid by France, said analyst Agnès Blazy of brokerage CM-CIC Market Solutions.


Shipments to the core client, the French Air Force, is winding down, with one Rafale this year, three in 2018 and none in the two following years, Trappier said.


Deliveries of a 28-strong batch of Rafales will start in 2021, bringing the French fleet to 180 Rafales, he said. A further tranche, the fifth, needs to be ordered to achieve the full complement of 225 Rafales.


Discussions are being held on a future F4 version of the fighter, he said. A contract was signed last year for an upgrade of 55 Mirage 2000D fighters, drawing on lessons learned.


That Mirage deal was probably worth some €200 million, Blazy said.


On export prospects, Dassault last summer sent information to Canada on the Rafale and has heard nothing since, Trappier said. The company follows through the news Ottawa's resistance to ordering the F-35, which contrasts with Europe's appetite for the U.S. fighter, and Dassault is "remaining in ambush," he added.


In Europe, it remains to be seen if Belgium and Finland will opt for the Lockheed Martin joint strike fighter, he said, with the former having issued a request for information. Switzerland is also looking to renew its fighter fleet.


For the United Arab Emirates, Dassault has "strongly supported" deployment of the Mirage 2000-9 in Yemen and has provided information on the Rafale, he said.


The company expects India to buy a further batch of fighters, as last year's 36-strong order is small compared to a previous planned purchase of 126, he said. There is also the Indian Navy's interest in buying 57 fighters for its aircraft carrier, a requirement which the company also hopes to meet. There lacks a timetable for that project.

Dassault expects Britain and France toward the end of the year to commit to the next stage of the future combat air system, a bilateral project to build a prototype combat UAV, he said.


An Anglo-French summit at Amiens, northern France, last year agreed to launch in 2017 full-scale development of the prototype.


Britain's planned exit from the European Union has sparked great uncertainty, but the U.K. is a major actor in European and NATO defense, he said.

There is also the Lancaster House treaty with France; British Prime Minister Theresa May and French President François Hollande have said the two countries would maintain strong defense ties.


On a project for a European medium-altitude long-endurance UAV backed by France, Germany, Italy and Spain, a study is due to be delivered next year to OCCAR, the European procurement agency, Trappier said.


Dassault reported a drop in 2016 net profit to €384 million from €482 million in the previous year, on sales softening to €3.59 billion from €4.18 billion.


The profit margin slipped to 10.7 percent of sales from 11.5 percent, while the book to bill, or ratio of orders to sales, stood at 2.7.


Orders fell to €9.56 billion from €9.88 billion, while the order book rose to €20.32 billion from €14.18 billion, boosted by last year's Indian order for Rafales.


Cash holdings rose to €3.1 billion from €2.8 billion, with working capital requirements falling sharply due to advances received on the export contracts. Thales, in which Dassault holds a 25 percent stake, has performed "very satisfactorily," Trappier said. The electronics company benefits from the Rafale deals, particularly the Indian order.


Dassault won 21 Falcon orders last year, down from 25, following cancellation of 12 orders for the new 5X model. That long-range business jet is late for delivery due to problems with the Safran Silvercrest engine.