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Collapse Now Looks Inevitable for Fairchild Dornier

In what likely spells doom for Fairchild Dornier, Canadian aircraft maker Bombardier announces it has abandoned talks on a takeover of the insolvent German company's flagship regional jet program.

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Losing altitude: Fairchild Dornier is on the brink of insolvency again.

In what almost certainly spells the end of the line for Fairchild Dornier, Canadian aircraft maker Bombardier Inc. said it had decided to abandon talks on a takeover of the insolvent German company's flagship 728 regional jet program.

The announcement came as a complete surprise to the workforce at Fairchild Dornier's site in the Bavarian town of Oberpfaffenhofen. Fairchild had spent two years and more than $1 billion with its partners in the development of its 728 jet, a 70-seat aircraft that was due to enter service in 2003 and had won high price from aviation experts.

According to industry insiders, Bombardier had asked suppliers to agree to price discounts of up to 20%. When they refused, it decided to pull out of the project.

All the Bavarian company's hopes rested on the project, which, according to Braun's estimates, required further investments of $400 million. U.S. aviation giant Boeing has already rejected participation in the 728 project, saying the 70-seater jet is not a product on which it could make money.

But Braun on Tuesday spoke of another party that was, he said, interested in the 728 project.

According to information from Fairchild's works council, the company in question is Italy's Alenia.

Braun, said on Tuesday that with the opening of insolvency proceedings at the start of July, Fairchild would be split up and up to 1,200 workers, one third of the German total, were likely to lose their jobs.

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