April 13, 2012 / 10:21 AM / 6 years ago

Geci's Skylander aircraft needs more cash-report

PARIS, April 13 (Reuters) - Geci’s Skylander turbo prop aircraft needs extra investments worth tens of millions of euros, a report viewed by Reuters showed, as European Commission probes into state aid previously awarded to the French engineering group continued.

The expert report, commissioned by the French state, comes as France’s presidential election campaign heats up and as the European Union’s antitrust regulator examines several forms of state aid worth some 50 million euros ($65.87 million) combined to Geci.

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 as of 2014, is seen as key to support the economy and industry of France’s north eastern Lorraine region.

The rescues of troubled industrial sites have become battlegrounds in the election campaign, dominated by president Nicolas Sarkozy and socialist frontrunner candidate Francois Hollande, but any hint of more state aid would be met with a wary eye by the EU’s competition regulator.

The Skylander is designed to carry up to 19 passengers or 2.7 tonnes of cargo and to serve the needs of small airlines and logistics specialists like FedEx as well as to conduct surveillance flights. These operators seek 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 were suspended from trading on Friday.

Geci Director Pascale Sansonetti told Reuters that the company would soon issue a statement on the report. “The audit has not been completed yet, talks are continuing.”

The experts deemed Geci’s plan to deliver 1,500 planes in 15 years too optimistic, not taking into account any possible delays or adaptations to the aircraft. Delivery of 1,000 aircraft in 20 years - or 48 aircraft a year - would be more realistic, they said.

Geci said in March that negotiations with Geci Aviation and Russia’s Aviamost to buy 40 Skylander aircraft and an option to buy an additional 260 continued. The two had signed a memorandum of understanding in November last year.

The first batch of aircraft would represent potential revenues of $260 million, Geci has said. ($1 = 0.7590 euros) (Writing by Caroline Jacobs; Editing by Helen Massy-Beresford)

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