July 18, 2019 / 11:11 AM / 4 months ago

Thales CEO says makes sense for Europe to combine fighter projects

SINGAPORE (Reuters) - The head of French defence electronics group Thales, said it would make sense for major European countries to combine efforts to build a new generation of fighter jets.

FILE PHOTO: The logo of French defence and electronics group Thales is seen at the company's headquarters in Merignac near Bordeaux, France, March 22, 2019. REUTERS/Regis Duvignau

Dassault Aviation and Airbus are leading a Franco-German programme - the Future Combat Air System (FCAS) - which includes a range of associated weapons such as drones. Spain joined the project last month.

Britain is going ahead with its own plans for a new combat jet called “Tempest” led by BAE Systems and took a step towards a partnership with Sweden on the project on Friday.

“We need all these large countries and large industries to deliver such an ambitious programme if Europe wants to play in the same league as the U.S.,” Thales Chief Executive Patrice Caine told Reuters in an interview.

“Europe should be united in this front. That’s just common sense,” he said when asked whether there was room for multiple projects.

Thales is involved in the FCAS project as a supplier to Dassault, but is said to be vying with Airbus for the key role of providing over-arching systems needed to marry manned and unmanned aircraft and enable increasingly connected warfare.

A spokesman for Thales denied any rivalry with Airbus.

Caine pitched Thales’ capabilities in those areas, but is expected to face opposition from Airbus, which has warned on behalf of German industry that the high-level Franco-German initiative could collapse if France grabs too much of the work.

“What we would love to put on the table as our own contribution is ... what we do in terms of sensors like radars, electronic warfare, communication, optronics,” Caine said.

“Another aspect is what is called collaborative connected combat - how do we connect platforms, combat aircraft, UAVs, drones, helicopters, satellites, to all the different platforms that are on the battlefield, in the air or in space?”

Analysts have also questioned whether Europe - which currently offers three competing fighters - can afford to divide its efforts in future, while the defence industry is urging European capitals to move swiftly or risk losing out to bigger players.

UTC-RAYTHEON DEAL

Caine said defence markets continued to grow rapidly in Asia, joined by rises in defence spending in western Europe in the light of growing tensions with Russia.

Asked about the impact of a planned $120 billion U.S. merger between United Technologies and Raytheon spanning commercial aviation and defence, Caine signalled no immediate pressure to respond in Europe.

“They will remain strong competitors. Will they be even stronger by bringing together avionics and missiles... I am not sure,” he said. “In terms of competition for me, first analysis, it should not change the landscape.”

Caine said he was cautious about consolidation in European defence industry, but that Thales was ready to seize any opportunities that arose.

Some analysts say the Raytheon deal could revive talk of a tie-up between Thales and engine maker Safran, which abandoned informal merger talks in 2007, though that would need backing from the French government and Thales shareholder Dassault.

Earlier this year, Thales - whose products range from in-flight entertainment to avionics and satellites - completed a 4.8-billion-euro takeover of chipmaker Gemalto, boosting its presence in the booming security services market.

French newspaper La Tribune reported on Tuesday that the company’s satellite venture with Italy’s Leonardo, Thales Alenia Space, would shed 452 out of 4,800 jobs in France due to weak demand for its satellites.

Reporting by Aradhana Aravindan; editing by Tim Hepher/Jason Neely/Jane Merriman

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