Fairchild Dornier has lodged a complaint with the European Commission against the Brazilian Government's Proex export support scheme, which the US/German company says gives rival regional aircraft manufacturer Embraer an unfair advantage.
Meanwhile, Fairchild Dornier has landed a deal to supply US airline Midwest Express with up to 15 328JETs.
The Proex scheme is intended to allow Brazilian exporters to offer their customers international standard interest rates on financing packages, compensating for Brazil's 10% domestic interest rates with a Government-funded 3.8% rebate.
Fairchild Dornier, however, alleges that the Brazilian manufacturer is offering financing packages for its aircraft via international banks with a basic 7% interest rate, yet still benefits from the Government scheme, giving Embraer an unfair advantage in selling its EMB-135 jet against the 328JET.
The Canadian Government recently agreed to negotiate an accord with Brazil following a similar complaint from Bombardier. The European Commission now has to decide whether the scheme violates World Trade Organisation rules. If it does, legal action could be taken against Brazil, says Fairchild Dornier managing director Thomas Brandt.
According to Brandt, meetings are expected soon at government and industrial level in a bid to resolve the problem directly. Discussions have already taken place between the German and Brazilian economics ministers.
Meanwhile, Midwest Express has placed a firm order for five 328JETs with 10 options, making it the US launch customer for the 32-seat twin-turbofan-powered aircraft. Midwest's feeder subsidiary, Skyway Airlines, will operate the aircraft.
Deliveries are scheduled at a rate of one a month from March 1999. Skyway now operates 15 Beech 1900D turboprops, serving 25 US cities from Milwaukee, Wisconsin, and Omaha, Nebraska.
Midwest Express has replaced Aspen Mountain Air/Lone Star as the 328JET's US launch customer. Aspen's order, placed in 1997 for up to eight 328JETs, has been removed from the orderbook because the airline has apparently missed progress payments.
Sources suggest that the Denver, Colorado-based airline has financial problems. The manufacturer is working with the airline to remarket the turboprops.
Source: Flight International