Andrew Doyle/MUNICH Graham Warwick/WASHINGTON DC

Fairchild Dornier has cancelled the 428JET programme after determining that development of the 44-seater is no longer economically viable.

The move has seen the 428JET's main launch customer, Atlantic Coast Airlines (ACA), revamp its deal with Fairchild Dornier and boost its commitments for the rival Bombardier CRJ family.

The decision to cancel the programme was taken as part of the "face reality" review of all of the company's projects carried out after its takeover by US investment firm Clayton Dubilier & Rice. Fairchild says it remains fully committed to the 328JET and the larger 728/928JET family.

Fairchild chief executive Chuck Pieper says the progressive relaxation of US scope clause restrictions resulted in the 428JET being pitched head-to-head with established 50-seaters from Bombardier and Embraer, undermining the business case for the derivative.

The problem was compounded by Fairchild's failure to secure risk and revenue sharing partners for the 428JET, forcing it to sub-contract a high proportion of the work while assuming most of the development costs.

"This would have meant several hundreds of millions of dollars in negative cash flow throughout a 10 year period," says Pieper.

Bombardier has acted aggressively to see off competition from the 428JET, and Embraer's 44-seat ERJ-140, by offering lower-priced 40- and 44-seat versions of its 50-seat CRJ200, allowing it to scoop a major order from Delta Connection for up to 500 aircraft. The ERJ-140 has yet to secure a customer.

The 428JET - a stretched version of the 328JET incorporating a modified wing - had been due to enter service in early 2003, following a six month programme delay announced in April. Firm orders for 50 aircraft plus 63 options were placed by ACA, Skyway and KLM Air Alps.

ACA Holdings has revised its deal with Fairchild Dornier down to 125 orders and commitments for 328JETs from 135 328/428JETs previously (see table). To fill the void left by the cancellation, ACA has boosted its CRJ200 commitments by 83 aircraft, including 30 conditional orders.

The 428JET was "always part of an open-ended arrangement", says ACA. "They were ordered conditionally... subject to final selection between the 328JET and 428JET."

Both Skyway and KLM Air Alps say they have yet to decide what to do about replacing the 428JET.

The termination of the 428JET is a major blow for Israel Aircraft Industries (IAI), which was to have designed and manufactured the fuselage, carried out final assembly and handled the entire certification process. Sources at IAI say the company stands to lose "tens of millions of dollars".

Fairchild declines to comment on the size of the financial write-down it will suffer, but says it retains a $5 billion firm order book from its other programmes.

Source: Flight International