French to Move on Partial Snecma Privatization at Paris

The French government plans to announce the partial privatization of engine-maker Snecma, clearing the way for the global aircraft engine market to be thrust into new industrial tie-ups.

French prime minister Lionel Jospin will start by opening up 20% of Snecma for sale. Snecma has been seeking the move for some time.

Several other engine makers are eager to get their hands on a stake in the company. Foremost among them is General Electric. David Calhoun, GE engines chief, indicated here he would take as large a position in Snecma as possible. The two companies are already aligned in their CFM International joint venture.

Snecma, for its part, is poised to step its own dealmaking once it's unshackled from the full government ownership, which company executives believe has hobbled their ability to acquire other engine businesses. For instance, Snecma chairman and CEO Jean-Paul Bechat has long had his eye on MTU, although its primary shareholder, DaimlerChrysler, would first have to be persuaded to put the business up for sale.

Even as a state-owned entity Snecma has been on somewhat of a shopping spree in recent years, acquiring the Labinal group for its aerospace equipment and Turbomeca for its helicopter engine business last year. Nacelle-maker Hurel-Dubois also has been acquired.

The French government's move is seen by many as long overdue, so European engine companies to achieve the same consolidation that has been undertaken in the U.S. The European market still has six independent companies, Snecma, Rolls-Royce, MTU, FiatAvio, Volvo Aero and Spain's ITP.