DAIMLER-BENZ (DASA) has withdrawn from the European team competing to develop a new 100-seat regional aircraft with China and South Korea, after failing to solve major differences with its partners.

The German manufacturer could not agree on a common proposal with Aerospatiale and its Aero International Regional partners Alenia and British Aerospace during recent joint negotiations with Aviation Industries of China (AVIC) and the Korean Commercial Aircraft Development Consortium (KCDC).

Differences are understood to have centred on Daimler-Benz's insistence on a second production line in Europe, in addition to Asia. AVIC and KCDC have made foreign participation in the 100-seat aircraft programme conditional on there being only one Asian production site.

Daimler-Benz Aerospace's head of civil aircraft, Hartmut Mehdorn, who has now left the company, is believed to have adopted a particularly hard line approach to the issue of European production during talks with AVIC and KCDC. Consultations between Daimler-Benz and Aerospatiale were unable to resolve the issue before the 15 September deadline for the submission of Europe's proposal.

Further negotiations between the AIR companies and Daimler-Benz are planned, but the German company's room for manoeuvre is understood to be complicated by the talks it is having with the Dutch Government over the requirement for funding to rescue its regional-jet subsidiary Fokker

Since the break down of the September talks, Daimler-Benz is believed to have made direct approaches to AVIC in Beijing. "The door is still open, but unless they change their position, they don't stand any chance of joining the programme," says a South Korean consortium source.

A German pull out leaves Aerospatiale and its AIR partners competing against Boeing and McDonnell Douglas to become a partner in the Sino-Korean project. AVIC and KCDC are offering a 20% share in the programme in return for Western technological and marketing support.

The remaining three European manufacturers are still pushing for a larger 30-35% stake in the programme. AVIC and KCDC have not ruled out a larger Western share in exchange for the transfer of key avionic and aerodynamic technology (Flight International, 13-19 September).

Boeing, in its proposal submitted on 18 September, has indicated a willingness to accept a 20% share in the project, say local sources. Further talks are scheduled for 11-13 October in Beijing, delaying any decision on selecting a Western partner until late October or November.

China and South Korea, in the meantime, have still to agree formally on a programme work-share and in which country final assembly will be located. Industry officials have suggested that Korea may now concede on airframe production in return for responsibility for the aircraft's engine.

Source: Flight International