Indonesian Aerospace has been short of cash for years, resulting in assembly line delays despite its excessively large staff, say industry sources. Attempts to line up new financing failed because private banks refused to provide loans without a government guarantee. CN235 and helicopter sales slowed as operators began to question the company's long-term survivability.

The government, which is still paying wages for the suspended employees, is now being asked to provide fresh cash to support a restructure. But its support for IAe has waned in recent years as it stopped forcing government agencies to use the company for servicing and expensive regional aircraft development projects ended in failure.

IAe also supplies small parts to several aircraft manufacturers. But industry sources say IAe was only sporadically given contracts by manufacturers, mostly one-time deals that were part of offset packages, and manufacturers should not have trouble finding alternative suppliers.

Source: Flight International