PAUL LEWIS / WASHINGTON DC
Only firm commitment to 728 can prevent more lay-offs
After the collapse of negotiations with Bombardier, Fairchild Dornier's 728/928 regional jet programme has lost its best hope of survival. The company is now looking to European investors to save the project. Temporary administrator Eberhard Braun is negotiating with more potential investors, but has only days left to present a rescue plan to a German bankruptcy court.
The gap between Bombardier's demand for financial concessions and the amount of proposed aid on offer was "big enough for us to walk away", says the Canadian manufacturer, adding, "This is definitely a final decision. It's pretty clear to all parties that it's over."
Certification of the 728 and the stretch 928 would have cost Bombardier an estimated C$1.4 billion ($903 million). Bombardier is understood to have been asking for a German government commitment to contribute €1.8 billion ($1.7 billion), but was offered only around €1 billion.
"We looked at the cost of producing and selling the aircraft. We came to the conclusion it did not make sense or meet our investment criteria," says Bombardier. Italy's Alenia and a Swiss investment group are both now believed to be interested in the 728. Alenia confirms it is negotiating with Fairchild Dornier, but declines to specify which programmes it is interested in, while Fairchild Dornier refuses to name either bidder.
The aerostructures division is attracting interest from fellow Airbus components suppliers, including German engineering group MAN. Airbus would not be unhappy with a MAN take-over. An industry source says Airbus is already talking to alternative manufacturers to ensure supplies if Fairchild Dornier collapses, but would prefer an existing Airbus supplier, such as MAN, to take over the aerostructures business.
Meanwhile, US investment firm Dimeling, Schreiber & Park (DS&P) believes it can rescue the 30-seat 328JET programme, despite a lack of orders. "The 328 is a manageable programme that has a lot of opportunities ahead of it. We don't think of it as a sunset programme, we're serious about it," says DS&P partner Rick Schreiber. "It's a very good product that would meet with reasonable success, if time and attention were devoted to just this programme."
The investment firm specialises in recapitalising businesses in trouble and eventually selling them. Recent examples include Rocky Mountain Helicopters, Business Express (later sold to American Airlines) and, in 1995, Piper Aircraft. It retains a 60% interest in Piper.
Schreiber admits that the 328JET needs large new orders to remain financially viable, but points out that airlines are reluctant to purchase any new aircraft until they first see a viable programme in place. Fairchild Dornier recently lost its largest 328JET customer when Atlantic Coast Airlines decided to opt instead for more Bombardier CRJ200s.
Time is running out, however, with Schreiber stating that he would like to have a deal in place "before the summer is over". It is still not clear whether DS&P would take on responsibility for supporting the 328 and earlier 228 turboprops.
Fairchild Dornier itself is nearing a crisis point. The company, says Braun, "will need a commitment to take over the 728 by 1 July to prevent more lay-offs". Between 800 and 1,200 jobs are to be cut across the company, with 1,200 more to go unless the 728 can be saved. A bankruptcy court will decide on 1 July whether to put the company through an insolvency procedure or declare it bankrupt.
additional reporting by Alexander Campbell
Source: Flight International
