The French government, through its investment bank Bpifrance, has recently invested in the newly created Ace Aéro Partenaires fund, which aims to support French SMEs in the aviation industry that have been badly hit by the COVID-19 pandemic and the subsequent drop in aircraft deliveries. 630 million Euros have been raised so far, with the French State (through Bpifrance) contributing 150 million Euros, Bpifrance (from its own funds) 50 million Euros, the “big four” French manufacturers (Airbus, Safran, Dassault and Thales) 200 million Euros, and the fund manager, Tikehau, the remaining 230 million Euros.

The investment is part of the French government’s 15 billion Euro plan to revive and transform the sector in three steps:

  1. providing emergency relief to the industry and its workforce, through export credits, government orders and emergency funding;
  2. investing in SMEs and the technological transformation of French aviation; and
  3. investing in R&D to design and build tomorrow’s aircraft.

From digital transformation…

The Ace Aéro fund and the current slump in demand (deliveries are forecast to be down 30% in the next four years) allow the French aviation industry to fill a growing innovation gap, and invest in the modernisation of its factories. Reports from industry advisors recently outlined how prioritising production numbers had lead the industry to lag behind in the optimisation of their production processes. The development of internet of things, artificial intelligence and predictive analysis will allow end-to-end supply chain integration (allowing real-time management of and communication with all direct and indirect suppliers) and a more accurate anticipation of fluctuating demand from airlines.

The ultimate goal of these investments is a transition towards a pull-based manufacturing approach (common in the automotive industry), in which aircraft production is based on actual demand, increasing efficiency and avoiding the production of costly “white tail” aircraft (manufactured but unsold aircraft).

…to green transition

In a previous blog post, Richard Hakes and Ashleigh Standen discussed the opportunity the COVID-19 pandemic presented to make lasting changes to the aviation industry by entrenching environmental targets in airline bailouts and financings. France has arguably a central role to play in the decarbonisation of aviation: the Airbus fleet represents approximately 45% of all aircraft in circulation, and Safran, through CFM International, supplies over 70% of all medium-haul aircraft engines.

The plan includes 1.5 billion Euros of state aid over the next three years to ensure France’s factories are not only the most technologically advanced, but also manufacture the greenest aircraft on the market. French aviation companies benefiting from government aid have signed a formal commitment to work towards these goals and the government has promised to ensure compliance with the commitment. 300 million Euros have been allocated so far in 2020 to projects ranging from the Hyperion hydrogen propulsion project, to the Majestic wing efficiency project (which hopes to reduce aircraft emissions by up to 5%).