GEC believes that it is close to tying up its joint-venture plans with Finmeccanica and is "encouraged" by initial talks on European consolidation in the wake of the French Government's Thomson-CSF decision.

GEC chairman Lord Prior, revealing improved first-half financial results, said that the Finmeccanica discussions had gone "better than expected" and are on course to be tied up within the UK group's current financial year to the end of March 1998.

The discussions, which opened in mid-year, involve creating a joint-venture company to cover ground and naval radar, command and combat and missiles businesses. GEC-Marconi will also take a minority stake in Finmeccanica's avionics business.

Prior says that GEC is "encouraged" by the Thomson-CSF decision and by "subsequent initial discussions on European defence-electronics consolidation". Senior sources within the group confirm that GEC is looking at a place in the new French alliance, which it hopes could emerge as the focus for a single European grouping.

GEC has also taken the first major steps in its own long-awaited re-organisation, with confirmation that it will float the Anglo-French GEC Alsthom power and train-building joint venture. That could add around $1.7 billion to the group's cash pile. GEC-Marconi, meanwhile, led group profit improvements over the half year, with pre-tax profits growing by 29% to £150 million ($254 million) and sales topping £1.6 billion.

Source: Flight International