PARIS (Reuters) – The French aerospace industry needs billions of euros in fresh capital to help struggling suppliers overcome the coronavirus crisis, which has pushed a third of its 200,000 employees into furlough, a leading industry association said on Tuesday.

French Finance Minister Bruno Le Maire said on Monday that further talks would take place on ways to help the aeronautics industry, including the possible establishment of a new fund.

Eric Trappier, head of military and business jet maker Dassault Aviation, said the industry as a whole was open to wide range of capital including private funds and the possible re-development fund to be backed by state bank BPI.

Trappier was speaking to journalists as president of France’s aerospace industry association, GIFAS.

He said dozens of small suppliers were in extreme financial difficulty and would need fresh capital which he estimated in the billions of euros, pending further study.

Others could be absorbed through consolidation or face restructuring as they adapt to the slower civil aviation demand likely to remain in place for several years, he added.

However, he ruled out any revival of merger speculation between the country’s two largest suppliers, Thales and Safran, state-backed firms that have intermittently been linked.

Dassault owns 25% of defence contractor Thales.

“As shareholders of Thales, we weren’t calling for a tie-up with Safran before the crisis and that is still the case today,” Trappier said.

Speaking again on behalf of GIFAS, Trappier called on European governments to follow France in supporting airlines to help preserve demand.

Even with such initiatives, aerospace employment is set to fall as production of jetliners drops but it is up to individual companies to examine how that should happen, Trappier said.

“There will be a reduction in employment, that’s certain,” he said.

GIFAS members, which include the vast majority of French aerospace companies, employ some 200,000 people and the association says the sector supports another 150,000 temporary or contractor jobs.

Trappier said some 30-35% of French aerospace workers were on government-backed partial unemployment or furlough schemes, with a third working in factories and the rest working from home. The industry has reached about 50% of normal activity.

(Reporting by Tim Hepher, editing by Louise Heavens, Kirsten Donovan)