Dassault Fed Up With Safran, Cancels Order

(RTTNews) - French aircraft maker Dassault Aviation SA (DUAVF.PK) said Wednesday that following repeated delays, it has terminated a contract with French defense company Safran (SAF.PA, 0IU8.L, SAFRF.PK) for its Silvercrest engine that was intended to power Dassault's Falcon 5X business jet.

Instead, Dassault will launch of a new Falcon program with an entry into service in 2022. The aircraft will now be powered by Pratt & Whitney Canada engines. Pratt & Whitney Canada is a unit of United Technologies Cop. (UTX).

Dassault said that it terminated the contract due to recurrent technical issues faced by Safran during the program development.

The delivery of compliant Silvercrest engines was originally planned for the end of 2013, in accordance with the Falcon 5X flight test schedule.

However, major technical issues in 2015 and 2016 forced Safran to announce a new schedule leading to engines delivery for the Falcon 5X flight tests by the end of 2017. This resulted in Dassault having to postpone the entry into service of the Falcon 5X jet by three years, from 2017 to 2020.

The three-year delay resulted in customers raising concerns and also led to 12 order cancellations for the Falcon 5X in 2016.

In the fall of 2017, Safran experienced issues with the high pressure compressor and informed Dassault of an additional delay and new performance shortfall, making it impossible for Falcon 5X to enter into service in 2020.

Dassault said it has initiated the termination process of the Silvercrest contract leading to the end of the Falcon 5X program and plans to start negotiations with Safran.

In a separate statement, Safran said that tests of the Silvercrest engine in the third quarter of 2017 led it to inform Dassault of a delay of the engine's certification schedule.

However, Dassault informed it does not share Safran's view of the status of the program, adding that it could lead to termination of the contract.

Safran said that contractual penalties applicable to the engine development phase have already been provisioned in its accounts and affirmed its fiscal 2017 outlook.