* Rafale jet deemed too expensive, yet to find foreign buyer
* Defence Minister expects results in India, Gulf
* Dassault CEO confident India deal sealed within months
By John Irish and Cyril Altmeyer
PARIS, Dec 19 France's defence minister played
down another sales failure for Dassault's Rafale fighter jet in
Brazil, saying he was confident there would soon be better news
from tenders in India and Gulf Arab countries.
Dassault Aviation has still not found a foreign
buyer for its multi-role jet, the Rafale, billed to be one of
the most effective and sophisticated fighter jets in the world,
but also one of the most expensive.
Shares in the company fell around 2 percent on Thursday
after Brazil's decision to award a $4.5 billion contract for 36
jets to Saab <AB SAABb.ST>, a surprise coup for Sweden, and a
second blow this year after missing out in Switzerland.
"This isn't a failure. It's a disappointment on a target
that wasn't a priority," Defence Minister Jean-Yves Le Drian
told Europe 1 radio. "Brazil was not the priority target for the
Rafale. We have more important targets in India and the Gulf
France had come close to sealing a deal with Brazil in 2011,
with Dassault promising to transfer technology for the new jet
in a bid to get an edge over the competition, but the Brazilian
government delayed its decision due to the economic crisis.
"I'd been expecting this ... for several months," French
President Francois Hollande said in Brussels where he travelled
for meetings devoted largely to the European defence community.
"What counts is that the Rafale is not bought only by the
French army," he added. "In order for it to be cheaper, it must
sell more, so it's a process ... I'm doing the main thing, which
is to defend this plane."
Hollande had travelled to the Latin American oil producer on
Dec. 12 to push the deal.
Dassault has been in exclusive negotiations with the Indian
government for more than a year to sell 126 planes.
In an interview with Reuters, Dassault Chief Executive Eric
Trappier said he was confident that Indian national elections to
be held by May would not have any impact on talks and that a
deal would be struck soon.
"I'm quite confident on the success of the Rafale in India
in the coming months," he said.
INDIA CRUCIAL FOR DASSAULT
An Indian air force official said at the end of October it
hoped to conclude the deal by March 2014.
"Brazil's choice was logical," a Paris-based trader said.
"It was an economic choice to pick the Swedish plane.
"France needs to understand that the Rafale is too expensive
and that the quality of the equipment is not taken into
consideration in the current decision-making process. With this
failure, the India contract becomes crucial for Dassault."
Under a five-year defence plan, the French military will
slow the pace at which it takes delivery of Rafale jets from
Dassault, taking just 26 over the years instead of 11 a year.
The French government's decision to slow the production
line may push Dassault to review the cost of the plane -
threatening to raise costs for the defence budget.
"We have good reason to think that in India and the Gulf
(Arab states) there will be results," Le Drian said.
The aircraft has received a great deal more interest since
it was deployed in the NATO mission in Libya in 2011, its first
ever combat operation, and earlier this year when France
intervened to oust Islamist rebels in Mali.
France's stance on Syria and a tough line over Iran's
nuclear programme, has helped its relationship with the
hydrocarbon-rich Gulf Arab states prosper, already resulting in
multi-billion dollar defence contracts this year.
Officials say they are optimistic on securing a large deal
to deliver anti-aircraft defence missiles to Saudi Arabia, where
Hollande will travel at the end of December, but also the sale
of Rafales to neighbouring Qatar.
Doha wants to replace its fleet of 12 Mirage fighter jets,
possibly buying 24 to 36 units. It is looking at the Rafale, the
BAE Systems-backed Eurofighter Typhoon and various
Dassault and BAE are also in a tight race to win a deal for
60 aircraft to replace the United Arab Emirates' Mirage fleet.
Trappier declined to comment on the two Gulf tenders and
another competition in Malaysia.
"There are also other (opportunities), but further down the
line," he said.