Dassault Aviation société anonyme (AM) Earnings Call Transcript & Summary

Thank you to everybody for joining us, and we're awaiting a few latecomers. We'll start the press conference. Given the health crisis, please do wear your mask. And also, as is our want, we will not have informal interviews with the Chairman or the CEO or Chief Operating Officer after the press conference. Please ask your questions during the conference session itself therefore, please. No informal interviews after this. Thank you [ says Mr. Trappier ]. Thank you for joining us. Everything is under control. Everything is properly monitored. It's nicer to meet in person, isn't it? Now as is our want, in spite of the current crisis, we will start off with a short film that sums up the first part of the year in pictures. After consulting and listening to experts, I've decided in conscience to take even stronger measures, even stronger so as to reduce our travel and our contacts to the strict essential needs. All companies must facilitate teleworking. And if this is not possible, as from tomorrow, they must adapt their organization to comply with barrier measures to block the virus, so as to protect their employees. In response to the unprecedented COVID-19 crisis and to comply with government directives, Dassault Aviation immediately implemented a plan of emergency measures with the health and safety of its employees and their families as an absolute priority. Ladies and gentlemen, dear colleagues, I wanted to speak to you as we hold our Executive Committee meeting this morning as each Friday. And of course, like last week, this meeting is being held remotely to comply with lockdown measures for those at home and the barrier measures for those here at the headquarters or at their plants. As soon as the crisis began, we took emergency measures. We sent home vulnerable people. We stopped production. We even stopped development work on site, while the appropriate measures were worked out. These measures were defined. They were presented to our labor unions, our several partners and the Central Works Council meeting was held. After much discussion and on the condition that our measures be properly enforced, our labor unions approved the restart plan by a large majority, giving us the confidence to set this plan in motion. To support Dassault Aviation, the Board decided that no dividends would be paid to shareholders, while maintaining profit and our profit sharing agreement for employees. A crisis management team, chaired by the CEO, met twice daily. It was supported by specific crisis management teams; a multidisciplinary human resource team met since January, including the coordinating occupational doctor; a risk management team to establish a business continuity plan in line with the HR team; and an industrial team. So just 29% of us were present at the sites, with 43% teleworking, which means more than 50% of the workforce active, 52%. Employees quickly adapted to teleworking, which became widespread and increasingly efficient. 1,800 laptops were deployed. More than 1,500 teleconferences were held each day. To ensure the safety of employees on site, all necessary measures were taken. Masks were procured and distributed at our sites. Wearing masks was mandatory, ensuring support for the Armed Forces, particularly for operations in progress and to maintain the permanent posture of security. This was an absolute priority for Dassault Aviation. The company's efforts and determination to fulfill our essential missions quickly led to the resumption of our aeronautical activities and compliance with the contractual commitments in the military and civil scopes. The Ministry of the Armed Forces visited our headquarters on the 15th of May, a strong symbol of the government's support in this time of crisis. Thank you all for the work you've been doing, your mobilization, your diligence and the trust with which our relations have been maintained. I'm happy to see that you found ways and means of creating totally different working conditions. That is indeed an incredible asset. You were responsive to our urgent priorities. Thank you very much for that, and we will continue to work together in great confidence in the weeks and months ahead. I have 2 priorities when we look at all this. In the short to medium term, the Rafale, and in the short to medium term extending into the longer term, the NGF. If there are 2 areas where we really need to work together to make sure they are solid, it is these 2. They're what ultimately ensures that we always have a production tool in France and a strong engineering department in cooperation for the future. Dassault Aviation took part in the efforts to contain the public health crisis by providing the Armed Forces with 2 Falcons for the Resilience operation in order to quickly transport medical personnel. Flights were also operated for the NGO, Aviation Without Borders. The company provided regional health authorities with 130,000 masks at the start of the crisis. Dassault Aviation employees also played a key part in multiple solidarity operations supported by the company, preparing meals for hospital personnel or making facial shields at all of our industrial sites for those on the front lines in the fight against COVID-19 and also for dentists in some areas of Greater Paris when restrictions were lifted. The entire aeronautical industry has been particularly hard hit by this crisis, a sector with hundreds of companies of all sizes and more than 300,000 employees. The government support is thus vital to avoid the collapse of this strategic sector. Within the GIFAS, Dassault Aviation has been fully involved in establishing the aeronautical sector support plan with the government. This plan mitigates the disaster that would have taken place without such a plan. Firstly, furlough scheme must continue. Second, we've created a fund with about EUR 200 million from the 4 main prime contractors, the Big 4 as they're called, and EUR 200 million from the government. With this EUR 200 million -- plus EUR 200 million, we will raise additional private capital to reach around EUR 1 billion, which we will use in part to keep certain companies from going bankrupt and possibly to help them upgrade so that coming out of the crisis, our supply chain is stronger than ever. It needs to be competitive, and that is why the plan includes a digital element, for example. We need to accelerate the digital transformation of our supply chain and the Big 4. The scope is from now for the next 1 or 2 years, which is how long the crisis will last, but we are also looking beyond. The future-oriented aim is to work with the engineering departments on more digital carbon-free aircraft. Thanks to our cohesive, proactive and determined teams and constructive dialogue with the labor representatives, Dassault Aviation has every possible asset in its hands to manage this crisis in the short, medium and long term and thus, to continue its activities for the company's future, including the major programs such as the Future Combat Air System. The contract to launch the FCAS demonstrator program was signed on the 20th of February 2020 at the Ministry of the Armed Forces in Paris by France, Germany and Spain in the presence of the main industrial partners. The goal is, in 2026, to fly the technological demonstrator of the Next Generation Fighter, the NGF, which is led by Dassault Aviation. During this first half of 2020, the company also focused on developing the Rafale F4-standard. Training for Indian mechanics and pilots continued in Mérignac, as did acceptance of the Rafales produced. A new upgraded ATL2 was delivered in East. In the civil area, Dassault Aviation prioritized the Falcon 6X. The development schedule for this new aircraft is keeping the target of 2021 for its first flight and 2022 for entry into service. On the 18th of June, Éric Trappier signed a patronage agreement with General Baptiste, the National Delegator of the Order of Liberation. Founded by General de Gaulle in 1940 to honor those fighting for France's liberation, the order now works to promote the spirit of defense, a cardinal value during this unprecedented global crisis.

Thank you for this short film. We're going to present the results. First, let me talk to you about the context. The COVID pandemic hit us. Just as many others, the aviation was very strongly hit for the commercial airlines but also the business airlines. We will talk about this later on. We quickly decided to contribute to take part in the Resilience operation. We think that thanks to the Falcon that we had put at the disposal of the Armed Forces at a critical time for our country and in the Aviation Without Borders organization, people could travel within France swiftly and safely to balance out the health efforts in France. And we rebuild our operations in the company, as you saw in the picture the production tool, but also the treasury sector because the workstations were redesigned to take into account social distancing. We quickly, and this was demonstrated, we started working from home intensively. To give you an idea, 500 employees at the beginning of the year, from 500, we went to 4,000 employees in just a few days. So it was a major effort to maintain a certain activity when everything has stopped 2 days after the 16th of March. We immediately launched continuity plan with 1 major priority, to support the Armed Forces, especially the French forces, but also the foreign ones, support a few Falcon clients who kept flying during the crisis and to try and maintain a certain level of production and delivery of Rafales and Falcons during this very delicate period. The development of Falcon 6X, which is a priority to keep on time with our time line of 2022, we have to coordinate the actions of the different players of the 6X, whether they were in the United States, in Canada, in France, so that we might not delay this program, which is the case today. We also had to deal with the supply chain, identify and adapt the loads with our subcontractors so that we could keep on with our efforts, not only the internal efforts, but efforts with the entire ecosystem contributing to the Rafale and the Falcons. And the last point, and this was also recalled in the film, in the support plan to aeronautics, the CORAC actions. In very little time, Dassault Aviation contributed to the CORAC, the Civil Aviation Research Council, so that we can have a carbon-free road map and so as to contribute to the effort of the French authorities and the European authorities, that is to have a carbon-free aviation very soon. One of the consequences of the COVID, not only health but economic, of course. Some of our clients have delayed the time when the aircraft would be delivered. We delivered 30 Falcons by 2020, we would tell you about the details, instead of the 40 planned. So we've lost 10, which will be carried over next year. And the fact that the orders were not up to the mark. We will talk about this later on. So therefore, we still have a few aircraft available this year. So beyond this lag in net sales, which is related to the economic impacts with our clients, it is also the cost, the cost of the expenses, of all the measures. This expense was immediately taken into account in our cash and luckily so, support from the state, which I'd like to thank for all the -- thanks to all the measures announced immediately by the state, furloughing, et cetera, et cetera. So these effects, we will have to deploy them over time. We'll talk about the military and the civil sectors. Maybe you have some questions. We'll have to assess the impacts over the longer term of this major crisis. Now in spite of all this, I'd like to tell you that we are preserving an unchanged ambition in terms of our development and in our strategy. We'll keep selling our Falcons, we're still selling them. We will keep developing our future products, and we will renew our range, 6X. We'll pursue our efforts for the future of Falcon. I will not tell you much more about that today. We are discussing some additional batches with France for the Rafale and with some other countries for exports. We are developing our multi-mission Falcons, whether it's for the Archange program or the maritime Albatros program. That should give way to some new orders at the end of the year. The technologies within CORAC's efforts in self-funding, self-financing to prepare our future technologies helped by the support from the government for CORAC. The NGF program, you saw the launching of the first step at the beginning of this year for the demonstrator. So we pursued this work. It was difficult because setting up the physical platforms was not doable, and this was replaced by a lot of exchanges through videoconferencing. But we kept intact our development ambitions during this first phase, and we will have a second phase in the coming year. The contribution to the MALE program, we have adapted this program to meet the needs of the OCCAR and the 4 countries, and we hope that this program will be able to start in the coming months. The high level of research and development, I'll tell you more about this later on, the continuity of our transformation plan, we're going to maintain it. More than ever, we will need digital transformation for us and for our supply chain, an extended engineering platform that plans for manufacturing according to the new tools and the new ways of designing aircraft, producing them and supporting them. We have just rescheduled things, rescheduled our plans such as to adapt ourselves because of the various constraints. We have adapted our workforce. We had lower workloads, 30 aircraft instead of 40. Will the market evolve or not? That's one of the major questions. And according to the assumptions, the additional Rafale orders, the return for Falcon orders, we will see how we will adapt our workforce to this planned workload. All this was done in total transparency with the trade union representatives of the company. As for the activity, you've seen it in the film. We delivered 7 Rafale to India and Qatar in the first half of 2020. We have pursued negotiations with the state on the additional batches or the additional batch. We worked on the F4-standard. It's been delayed a bit because of the COVID. We'll have to ramp up in the coming months. As you know, I'd like to remind you, no deliveries of Rafale in France in 2020 or 2021. This is the French military procurement law void. So we will have deliveries for exports. France will start resuming deliveries of the Rafale from 2022 onwards until 2024 to keep delivering the 180 aircraft ordered. And we have resumed. This was slowed down during the COVID period. We have started prospecting for exports to win new contracts for the Rafale. This might take more time because the COVID effect is not helping us speed up the number of contracts because a lot of countries are directly affected, either directly from the health point of view or indirectly from the economic point of view. As for the Future Combat Air System, we're continuing our work with our partners. The major part of the work which was done was to integrate Spain. You know that Spain was not there at the beginning, and they joined us later on. Now the whole issue was to integrate them, and this is underway. And Spain is going to become a full-fledged partner whether it's in the GCS studies or in the definition of the demonstrators, the various pillars of this major program that we are pursuing with our partners, and especially with the DGA, which is the leader in this area. The Eurodrone, I talked about this. The negotiations are underway. Airbus is the leader in the negotiations with OCCAR, which represents the 4 countries interested by this program. And Leonardo and Dassault Aviation are the main partners. So we have very strong coordination with Airbus to support Airbus in the discussions with OCCAR. As for the multi-mission aircraft, I talked about this, Archange. We had the first order, 2 aircraft. The third airplane will be activated. It's an option. This will happen at a later stage. We are defining the technical missions of the Albatros 2000. We delivered a third Falcon 50SurMar, equipped with hatches for dropping SARs, search and rescue kits. And we delivered the Falcon 2000LX to DLR, which have been bought during the Berlin Air Show. Atlantique 2, the third upgraded ATL2 out of the 7 to be performed by Dassault Aviation, this was released early April. And the Navy is very happy with this revamped ATL2. The Falcon context, the COVID epidemic hit us, directly impacting the business jet market. For some of our clients, we pursued our support to them. So our client support is active, although very slowly. We've pursued, as you've seen, the delivery of Falcons. You'll see this in our figures. And we pursued the development of the Falcon 6X. So there was a period where we were startled after the 16th of March, where we completely stopped. And then we started reopenings step by step. And thanks to remote working, we really managed to work well to keep up with our lead times and to keep up with our objectives. I just have to note that there's a strong increase in the business jet business. The figures I have are close to 80%, if we compare at the same time -- with the same time last year. These are shorter flights, intra-U.S. or intra-Europe or intra-Asia, and they have really developed in terms of volumes since the past few weeks. Another trend is on the second hand, we hope that there will be more activity in the field of sales of new aircraft. As for the 6X, you saw a little bit in the film, we are on time in spite of the difficulties because of the closing of the border lines. We had a few difficulties working with our partners, but the aircraft #1 is completed now in Mérignac. We powered it up. The aircraft #2 and 3 are being assembled. The Pratt & Whitney engines are here, nominal development, 2,000 hours of testing, plus 16,000 hours for the high-pressure system, which are the critical parts of an engine. We have a second test bench with the #1 engine, which will be the one that will be used on the aircraft. And of course, we will reduce the CO2 emissions, in compliance with the regulations and largely about noise performance requirements. And the major flights will be at the beginning of 2021, and it will enter into service in 2022. We are pursuing our future Falcon project, which to disappoint you once again, not that I don't want to talk to you about this, we should have made an announcement in this first half of the year as I had announced at the beginning of the year, but the problem with the COVID is not making me put off the development with the announcement because if clients cannot come and see us, cannot discuss, they cannot contribute to this announcement. So together with them, we would like to put it off at the moment when it will be easier to travel, which is not yet the case for the moment. And now, I'm going to go on to the results. As for the order intakes, we have 5 Falcons that have entered since the beginning of the year, this was before the COVID crisis just before this period, compared to the 7 last year. We have a little more last year because we had announced our results in September, but the first half of 2019 was a bit flattish, too. In terms of deliveries, we delivered 16 Falcons in the first half of the year. We plan to deliver 30 this year instead of the 40 that were planned at the beginning of the year and the 17 that have been delivered at the same time last year. So therefore, the backlog is 42 versus 53 at the end of 2019. As for Rafale Exports, no new orders. The deliveries, 7 Rafales were delivered at the beginning of this year out of a total planned of 13. And this objective has not changed in comparison with the 26, which were the deliveries planned in 2019. So 13 is what had been planned in the contract underway with our Indian and Qatari friends. So therefore, the backlog for the Rafale will be 68 Rafales remaining, out of which, the 28 of the fourth batch, second part out of the 180 French. In terms of figures, the order intake is EUR 1 billion, much under what we had last year. The net sales, EUR 2.6 billion, slightly lower than last year with mainly the delivery of export Rafales, which are at 50% of net sales. Last year, we had deliveries of ATL2. So you cannot just bank on the number of aircraft delivered. One Falcon, 2 less and a few Rafales less. And the backlog is at EUR 16.2 billion compared to the EUR 18 billion at the end of 2019 with a major part of the backlog, which is in Export Rafales. Then regarding our consolidated self-funded R&D. You see we're maintaining our efforts in terms of the development of the 6X and the future Falcon will be around 600, the 600 figure I mentioned to you at the start of the year. As the net sales are going down, obviously, the percentage proportionately is going up 9.9%, therefore, of net sales as you see here. Compared with last year, it was 8.4% of net sales. And got to take account of the results that we would have had if we haven't had COVID. So in terms of the adjusted consolidated income statement, you see here the net sales figure with the operating income, EUR 55 million; operating margin, 2.1%; financial income, minus EUR 19 million; Thales and other equity affiliates, EUR 60 million contribution, down compared to the previous year. Thales will be announcing its results to the newspapers and the analysts tomorrow morning. And after deducting taxes then, the net income comes out to EUR 87 million. That's a net margin of 3.3%, obviously down compared with the same period last year and down compared with what that result should have been in the absence of COVID. In terms of cash flow then, you know the company decided to forgo the payout of a dividend. There was a dip in distribution of dividends from Thales, of course, too. So a drop in cash position mainly because of the working capital requirements. In the area of Rafale, we had a lot of down payments and further 2 deliveries. This is the situation. There are deliveries being made at the moment. So the guidance for 2020 then, revised guidance that is in the uncertain COVID- 19 context, it's very hard to know what's going to happen and hard to know how things will evolve, how the COVID virus will evolve. It's still around quite a lot heavily so in countries like the United States. That's an important market for the global economy and, of course, for business jets, too. So it's a delicate context to make forecast in. And it's therefore hard to forecast anything. But nonetheless, if our discussions with our clients that are going on at the moment are anything to go by, we think we can forecast a delivery of 30 Falcons if the corporate situation doesn't go downhill too much in the United States. It's fairly bad, but our Little Rock plant is still operating in spite of the COVID crisis. So it's a risk that I'd like to recall there. But this objective, we think, is tenable if there isn't, as I say, a major deterioration due to COVID. Now Rafales, delivery of 13 Rafales, the same as before the COVID crisis hit. And of course, decrease of net sales because we'll have the drop of 10 Falcons going from 40 to 30, but also in the area of support, Falcon support of specific planes haven't flown, well, there will be an immediate impact on the ordering of spare parts and servicing of Falcon aircraft around the world. So that's what I had to say halfway through the year now after this harsh crisis that impacts ourselves and our subcontractors. And we've continued doing our job, and we're looking to the future with a certain amount of uncertainty, but with certain assets, we think, as well to go forward. And at this point, perhaps we'll take questions if you would like to ask some questions.

Thierry Dubois from Aviation Week. Did you have cancellations of orders? And did you bring down the number of Rafales delivered in the first half of the year? You mentioned a total of 7 for India and Qatar. Would it have been more without COVID?

Well, on the cancellations of orders, the answer is no. What our clients have been doing, they've been paying down payments. When they've certain difficulties or they're afraid of the future, they postpone for the moment. Unlike the 2008 recession, orders were canceled quite a lot around then. No, we haven't had cancellations of orders. I'm not saying we won't have any, but in the first half of the year, we didn't have any. And therefore, the figure of 5 is net orders. So -- but there have been some postponements of deliveries. People will collect their aircraft just next year as opposed to collecting them this year. On the Rafale, well, we're on track. We didn't give guidance in terms of deliveries for the half year. So I can't really tell you if it will be more or less. Obviously, work was slowed down a bit by the COVID crisis, but we'll be delivering our 13 for the year. So we have managed to stick to our course, more or less, in our forecast. The -- and our schedule. It was mainly India we're aiming at because they really wanted the planes to be transferred to India in the near future. And that's next week it will be happening, actually.

Jean-Marc Tanguy, independent. Aren't you disappointed because you weren't concerned by the military section of the recovery plan, which was announced a few weeks ago by the Minister of Army, the military section? Do you expect something from the recovery plan, which is going to be announced in September, they will have a new military section. You must have read this parliamentary report where they're talking about the possibility of ordering a certain number of Rafale for the Navy and the Air Force. So are those the ones you talked about earlier on? Or are there more? And out of the 7 Albatros, out of the 13, do you think that we can accelerate the rhythm of this program now that you could be concerned by cancellations of Falcon 2000, which are the section of the Albatros? And the same question for Archange, which is concerned by the Falcon 8X sale.

So a lot of questions from the aeronautical point of view. What we had done upon the request of the DGA is to prepare ourselves to set up programs and anticipate things because it was out of question to create new programs only to supply or to anticipate a recovery. In this anticipation, the Ministry of Armies decided that it would be according to the French military program law. And according to the budgets saved, they would be able to anticipate a certain number of things, but the range, as the Minister said, would be around EUR 800 million, EUR 600 million directly allotted to programs. Now the Rafale, if you take 12 aircraft, that is much above these sums. So it could not be part of this first envelope. So disappointed or not, well, we're all disappointed if we don't get the results we hope for. But this envelope didn't allow for this. Now the second section is this recovery plan. I'd like to remind you that for the profession in general, that the defense activities for the defense industry, this is economic stabilizer for our societies, not only for the major clients, but for the entire supply chain. This entire supply chain and the clients are highly regional. And these net sales, these orders in defense will be mainly for France here. We cannot talk about relocation. This is -- these are for locations in France. So this is fundamental for the entire profession. I would like to make a nuance because the profession is concerned, I am too. Exports will be deferred. You know that our model, economic model is based not only on the state orders, which is also based on exports. So it is actually necessary to have export contracts. That is true for Rafales and for all kinds of defense programs. So we can believe that with the COVID crisis, that there will be some delay in general. And we will certainly see this in 2020. 2020 will not be a record year in terms of export orders. So that's one thing. Now to precisely answer your question on the Rafale. As the Minister said on the day of the announcement of the air support plan, there are discussions that go back to before the health crisis on an additional batch of Rafale. There's a fifth batch, which is in the French military program law, and it goes slightly further. So we're discussing several options with the Defense Minister. I cannot tell you much more today. Any additional batch is, of course, welcome for us. Any new export contract will also be welcome. So we're working on both. We're not saying one instead of the other. We hope both, and we hope that we will have more orders and more deliveries from 2025 onwards. On the Falcons, Archange, well, there were 2. We left off a third, but it's done as an option. They just have to be committed, and we'll see. I'll let the parties concerned see if the option is going to be activated or not. But anyway, the defense people. But the third Falcon order should come in as part of the program. Regarding the Albatros program, we should start off with 7. The national Navy needs -- has additional needs that could go as far as 12 or 13. If the order is placed earlier, well and good. If the need exists, it will come in sooner or later anyway. So the Falcon 2000s are being sold. There was no cancellation of Falcon 2000, so up to date. And any earlier orders would be welcome, but we would like to get in the Rafale orders.

[ Pierre Tran ] is my name. What about your profit forecast? Have you got any guidance regarding your profit? Your profit, the net profit, I mean.

No, we don't usually disclose that, as you know, I'm sure.

What about your sales forecast then, guidance?

Well, it will be down compared to the last year. I can tell you that. It's nothing new, I'm sure, to your ears. You would have guessed that.

Well, what about the deliveries then? You mentioned next week deliveries of Rafale to India. How many Rafales will go to India? And what would be the financial impact, please?

Deliveries have been done. The ones that were supposed to be done have been done next week, it's the airplanes that are being transported to India. So there'll be a press release issued and so on and we'll tell you how many airplanes will have taken off from Mérignac.

Six, is it?

Well, you'll see. You'll hear when the time comes. Well, I would like to say the Indians remain present throughout the COVID period. We managed to maintain, with ad hoc measures, maintain the training of the pilots and the mechanics during the whole period to enable the full delivery to take place. And we had technical systems provided to the Indians to do the handover. How difficult things have been in India? The virus is really very active in India, as you know.

Are you very concerned about the survival of your suppliers?

Well, at one point, we were wondering about all this. Actually, there will be several waves. The first wave was, well, liquidity, liquidity, liquidity. The states acted immediately with guaranteed loans to cover the liquidity issues for some of our suppliers who don't have a lot of cash. And it's quite pleasant to have a lot of cash when there's a crisis. It's good to -- for your own support. So the first measures of the state towards the supply chain were these guaranteed loans. Now these guaranteed loans, we'll have to refund them. So there'll be other waves coming behind them. Then the drop in activity, all of a sudden, decided because of the quasi-total stopping of the activity and Airbus and Safran had to drastically reduce deliveries. When I talk about deliveries, these means deliveries of planes, with deliveries for our suppliers towards themselves. So furloughing allowed us to help these companies that were in major difficulty. So that was the first wave. The second wave that is arriving is this drop in activity, which is going to last. And since it's going to last, well, we have to be able to support it. So we leased a lot for long-term furloughing. So this was set up by the states, and it was discussed with the trading organizations and all the different divisions. And the supply chain will, therefore, be able to prepare for the future so long as there is resuming of the activity. So that was the second wave. The third wave, which is the most important one and which is the longest, when there will be a recovery, when there will be sales of commercial planes or Falcons again, this supply chain will have to be even stronger than it was before. It has to become more modern. It has to upgrade. And in order to do so, it needs to have funds so as to help its capital so that there can be a matching sum so that they can -- might have equity to allow for this upgrading or there has to be help from the state in the framework of the support plan to revamp when the calling here is to have more environmental aircraft that consume less energy, et cetera, et cetera, and be able to upgrade the digital systems because our supply chains and clients, we have to pursue our integration with the new digital tools. We saw during the crisis, it's the digital that allowed us to pursue our activity. So this data battle with the tools must be won in the major companies with the supply chain, and the funds will help. We're creating this supply chain. It is underway. We have selected funds as a priority. And the negotiations are taking place, and they're going to be completed. And this operational fund should be ready by the end of this month or at the beginning of August. But this is underway. And this fund, it's the 4 partners that would provide EUR 200 million. The state via BPI will also provide EUR 200 million. And the fund we've chosen will also put in a certain amount. And together, we will raise funds, private investment funds, so that we have a good and substantial envelope. And the GIFAS provided with the task force, a mapping of all the companies in difficulty in this supply chain. So we have the identification of all the issues, and we have a tool that should help us normally meet the needs of these companies. And of course, there will be several compartments, one to help the technological companies and one to help consolidation if that is wished by the companies. So they can consolidate in all these different areas, and the funds will be there to meet all these needs for SMEs.

Tristan from AFP. I have a question, please. Are you going to use furlough measures in the longer term? And to what extent? And what will have been the crisis impact on your research and development expenditure for the future?

Well, in the slides I showed you [ says Mr. Trappier ], you'll see we've maintained the self-funding of research and development for the development of the future Falcon range, 6X and NX that we didn't talk about today, but you see the self-funding. As you saw on the slide, it's running at a high level, remaining at a high level because we're hoping that when we exit from this crisis, whether it be in 6 months or in 2022, whenever, you'll need new aircraft, and we'll be around to provide them. We don't want to drop our guard. We want to make the necessary effort. It will cost us something out of our margin, but the Board of Directors has decided to do this. We want to upgrade our range. In a difficult period, it is true. But it's become key, it's become essential. So we have to upgrade our industrial tooling, and it's the same thing there. We're halfway through it now. We've a lot of work streams up and running in our manufacturing plants, as you know. And obviously, some matters have been postponed because for the last 3 or 4 months, certain things couldn't be done. But the third main work stream then is digital, digital. And we've got to reschedule certain things, time-wise, cost-wise, we might spend a little bit less here or there. But we're not slackening in our ambitions to have digital tools we will need in the future. We're working with our friends in Dassault Systèmes so as to put together those new tools for future development needs. And when I say future development, I'm thinking of the aircraft that are currently being developed, but also production-wise. Don't forget, digital tools will be part of our means of production as well because the key is to manage data so as to manage the company well, so we shouldn't drop our guard in terms of this kind of spending. So self-funding, R&D, industrial investments, physical investments, we'll be maintaining our efforts there. Won't make a lot of savings, but at times like this is not maybe the right time to start saving if you want to get out of the crisis. So you'll see that in the figures even better at the end of the year, I think. Well, the long-term furlough, yes, we'll be using that possibility. I can't tell you to what extent. We're still halfway through the process between the Falcon ordering that should pick up again. And then the talks on the Rafale going on, we'll adapt accordingly when we have a better -- when we have more visibility over the future. We've best-case scenario, worst-case scenario. We've got simulations and projections that we've been doing. We have worked for 2020. We think it's the years thereafter we'll have to see what the workload will be in those coming years and the need for a labor force, the need to use part-time working arrangements in the coming number of months or years so as to come back to resumption of a more normal business volume later on. And we're still working this out totally transparently with the trade union organizations in the company.

I'd like to go back to the SCAF. So has it been signed finally? And what is the role of this European aircraft? What is the role of the European Defense Agency in all this? And are there other partners in front of the door? Or are you going to stick to the 3 you already have?

So first, you should never say never. So I don't know if there won't be some new partners in the future. We must not exclude them. It is a program that will take a lot of time. It is ambitious. And we're not going to exclude them. However, to come up with the result and the result is to be able to deliver combat aircraft, remote carriers, as we say, and engines and ad hoc system for 2040, we mustn't waste any time. And so as not to waste time, we have to organize this cooperation today. This is what we are doing with our German partners. And we have to learn to work well together. And this is what we are doing, and this is not only Dassault and Airbus, but a certain number of companies in Germany, a certain number of companies in France. We have to get to know each other and share our work together. And we've decided since this was the will of the 2 states to make space for the Spanish, who joined the program. So we're already 3. And if we change partners every 6 months, I can tell you that we will not reach 2040. So what is important is to properly design this program, then we can see, we can accept new partners. But the architecture of the program, that has to be done now. So is it European when there are 3 European countries? For me, it is, yes. Now a European project? Do we have to be 27? I don't think so because we cannot manage, except for some projects that are directly steered by the commission. But in the field of defense, it's the different states that have the upper hand.

I'm from Capital. On the FCAS, have you any comments to make on the fact that the 10% of the FCAS seem to be incompatible as was said recently? And any further details about the FCAS?