FRANCE TO HELP SNECMA WITH FUNDS FOR PROJECT

FRANCE TO HELP SNECMA WITH FUNDS FOR PROJECT

Snecma, the French aircraft engine maker, this week was promised 2 billion French francs ($400 million) in cash advances from the French government to develop its next generation engine with U.S. partner General Electric.

The French government earlier this year had told the state-owned company it could move ahead with plans to develop the CFM XX, a mid-sized airplane engine with a 43,000-pound thrust, but had stopped short of helping with development costs.The project is a 50-50 joint venture with GE and the engine is scheduled to be on the market by the turn of the century. For Snecma, the CFM XX is urgently needed to complement the smaller CFM- 56 engine series, which it also developed with GE a quarter-century ago.

Snecma said the CFM XX will be designed for use on a future larger version of the A340 long-range airplane made by Airbus Industrie but that it also could be used on the Boeing 757. The company has said that before it begins the project, it wants guarantees from Airbus that the engine will be used on its planes for an agreed period.

The CFM XX is expected to cost more than $2 billion to develop. Company officials have said the advances would be reimbursed as others have been in the past. The announcement by the French government of the cash advance is the first in the aeronautics sector for a few years.

The practice has long been criticized by the United States during trade discussions on the civilian aircraft sector but no trans-Atlantic agreement has been reached for aircraft engines.

Bernard Dufour, president of Snecma, has said that the company is on the verge of bankruptcy and also urgently needs a fresh cash injection. The company is slated for eventual privatization.