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Aviation History
2002
2002 - 0170.PDF
HEADLINES AIR TRANSPORT PAUL LEWIS / WASHINGTON DC Fairchild Dornier secures funding for extended range developments Manufacturer wants to bring forward plans for renamed 728-200 and 928-200 as market interest grows Assembly of the first 728 is progressing well, with it travelling on its own landing gear for the first time last week Fairchild Dornier has secured addi tional funding in order to acceler ate development of extended range (ER) versions of the newly redesig nated 728 and 928 large regional aircraft, as market interest grows in more robust configurations. The US-German manufacturer wants to bring forward develop ment of the 728-200 and 928-200, renamed from the 728JET-XP and 928JET-ER, respectively, as part of the twinjet's redesignation exercise (see table). Company chairman Chuck Pieper says it has raised over $900 million through equity place ment and bank loans. He says German federal and Bavarian state banks have agreed $330 million in loan guarantees on top of existing guarantees. The deal is now before the European Commission for approval. The company's present share holders and banks have agreed to inject around another $600 mil lion. Shareholders Clayton Dubilier & Rice and Allianz Capital Partners, which own more than 90% of stock, pumped in around $400 mil lion in 1999 as part of a $1.2 billion recapitalisation. The remaining $800 million com prised debt financing from a con sortium of German banks and financial institutions. The new funds will facilitate development of the ER versions and pay for the extensive design changes to base line 728 and 928 designs. Fairchild Dornier would like to offer delivery of a 728-200 as early as the start of 2004, around six months after the first scheduled delivery of the baseline -100 to Lufthansa CityLine. This would be followed in 2004 by the Envoy 7 executive jet version of the 728, and simultaneous certification of the 928-100 and longer range -200 in early 2005. The 728-200 represents around a 2.8t increase in maximum take-off weight over the baseline 35.2t ver sion, giving the aircraft 740km (400nm) more range. A planned 728JET-ER incremental offering between the 728-200 and the Envoy 7 has been dropped. The lat ter will have a range of 7,400km, but with an eight-passenger limit, and a total of 25,000 cycles. The company board approved the product plan in December in response to a "big swell in interest" from airlines reviving their aircraft requirements and focusing on larger and longer range aircraft to supplement mainline operations, says Pieper. Old Model Name New model name MTOW (kg) Winglets "No longer available 728JET 728-100 35,200 No "Also has 728JET-XP 728JET-ER 728-200 37,990 39,500 No Yes type designation 728-300 Envoy 7 928JET Envoy 7**928-100 47,870 49.700 Yes No 928JET-ER 928-200 40,570 No BUSINESS GRAHAM WARWICK / WASHINGTON DC / TOM GILL & ALEXANDER CAMPBELL / LONDON Transatlantic trade war looms as WTO rules against US tax break Trade sanctions could cost US aerospace companies hundreds of millions of dollars, and may trigger a US-EU (European Union) trade war, after the World Trade Organi sation (WTO) confirmed that a tax break legal under US law qualifies as an illegal export subsidy under world-trade rules. Foreign sales corporations (FSCs), normally shell companies based in Barbados or the US Virgin Islands, allow US companies to keep up to 30% of export earnings out of reach of the US tax authori ties. Boeing is the largest US exporter, and, according to its last annual report, saved $235 million in taxes from FSCs in 2000. The US law permitting them was revised in late 2000 after protests from the EU, but the revision failed to satisfy the European Com mission (EC), which lodged another complaint with the WTO. This was upheld in September, and on 14 January the WTO rejected a US appeal, opening the way for $4 billion in sanctions against US companies, the highest penalty in WTO history. The US Government now has 60 days to comply, and must either remove the loophole, which would cost US companies "more than $4 billion" in increased taxes, accord ing to the US National Association of Manufacturers, or face sanctions, in the form of quotas, higher tariffs or outright bans. The WTO will determine the amount on 27 March, which will probably be lower than the $4 bil lion the EC claims FSCs have cost European business. The EC says it could give the USA a year to adjust its laws, with EU exports gaining improved access to US markets. The situation is complicated by another transatlantic trade dispute, over proposed US protective tariffs on foreign steel. And with US/EU aviation negotiations on Open Skies proposals on the horizon, a WTO dispute and possible trade war would come at a bad time. 4 22-28 JANUARY 2002 FLIGHT INTERNATIONAL www.fliqhtinternational.com
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