Friday, April 13, 2012

Geci's Skylander aircraft needs more cash-report

(Reuters) - Geci's Skylander turbo prop aircraft needs extra investments of tens of millions of euros, a report viewed by Reuters showed, as the European Commission continues to probe state aid previously awarded to the French engineering group.

The report by experts commissioned by the French government comes as France's presidential election campaign heats up, and as the European Union's antitrust regulator examines state aid to Geci totalling about 50 million euros ($65.87 million).

The project to build the small, light Skylander aircraft suitable for hard-to-access areas, should cost 306 million euros, or 70 million euros more than initially planned, the experts estimated, praising the project's technical quality.

The Skylander, which has yet to make its first flight and should be delivered to customers by 2014, is seen as essential for the economy of France's north eastern Lorraine region.

Geci said in a statement late on Friday the experts' estimate that the project would require financing of 200 million euros until the first aircraft were delivered - up from 120 million previously - was "excessive."

The company added it was looking at new ways to finance the Skylander programme and in particular at possibly finding long-term private investors and support from other companies.

The rescue of troubled industrial areas has become a battleground in the election campaign - dominated by president Nicolas Sarkozy and socialist front-runner Francois Hollande - but any suggestion of more state aid could trigger scrutiny by the EU's competition regulator.

The Skylander is designed to carry up to 19 passengers or 2.7 tonnes of cargo and serve small airlines and specialists such as FedEx Corp, as well as conduct surveillance. These operators want light aircraft able to land and take off from very small airports, sometimes with little infrastructure.

Geci shares and those of its subsidiary, Geci Aviation SA , were suspended on Friday. Geci said without elaborating that both stocks would not resume trading until Tuesday "for technical reasons."

Geci Director Pascale Sansonetti told Reuters the company would soon issue a statement on the report.

"The audit has not been completed yet, talks are continuing," Sansonetti added.

The experts said Geci's plan to deliver 1,500 aircraft in 15 years was too optimistic and did not take into account possible delays or modifications to the aircraft. Delivery of 1,000 aircraft in 20 years - or 48 a year - would be more realistic, they added.

Geci said in March that negotiations were continuing between Geci Aviation and Russia's Aviamost to buy 40 Skylander aircraft, with an option for an additional 260. The two signed a memorandum of understanding in November last year.

The first batch of aircraft could represent potential revenues of $260 million, Geci has said.

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