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Bet Shemesh Engines yesterday signed an agreement with MTU, Germany's largest manufacturer of aircraft engines, under which the Israeli firm will participate in the development of a jet engine for the new Falcon 7X executive jet.

The company expects the 2.2 percent share of the engine's sales revenues that it will receive in exchange to bring in some $100 million over the next 35 years.

Under the agreement, Bet Shemesh will invest $10 million over the next four years in the engine's development and manufacture. Specifically, it will supply the discs for the engine's turbines, as well as the turbine blades.

The engine's primary manufacturer is Pratt & Whitney. MTU has a 15 percent stake in the project, and has now sold 2.2 percent to Bet Shemesh. To date, some $500 million has been invested in the engine's development.

The Falcon 7X, produced by the French company Dassault Aviation, is due to hit the market in 2006. The plane will have three jet engines.

Avner Shoham, CEO of Bet Shemesh Engines, said that the agreement with MTU represents a major upgrade in the company's status, from that of a subcontractor to that of a key player in the international jet engine industry. The deal will also provide the company with a steady source of revenues, he said, thereby enabling it to improve its profitability.

Bet Shemesh has been making engine parts for the last 35 years. At the end of the first quarter of 2004, it had $80 million worth of orders, of which $26 million were for the current year. It finished 2003 with revenues of $167 million and a net profit of $2.7 million. Its major shareholders include Bronitzky Investments (31 percent), Clal Industries (21 percent) and Ormat Industries (11 percent).