Fairchild Dornier Faces Break-Up
May 10, 2002
Insolvent regional aircraft maker Fairchild Dornier is set to be broken up and sold in parts after hopes of finding an investor for the group as a whole have been dashed, its administrator said Thursday.
Canadian plane maker Bombardier Inc, a direct competitor of Fairchild Dornier, is currently conducting a technical evaluation of the group's flagship 728 regional jet program, which is widely considered the most profitable part of the company. Bombardier said it would decide on any further steps after the evaluation was completed.
"Our chances have increased over the past few weeks," insolvency administrator Eberhard Braun told Handelsblatt. He confirmed that Bombardier was currently the only potential investor to carry out a technical evaluation of Fairchild's Oberpfaffenhofen site.
Hopes that the group could be sold as a whole to companies such as EADS, Bombardier or Boeing, had since evaporated, he added.
Germany's government on Wednesday signalled that it would provide financial support to the 728 regional jet programme if it is taken over, provided the investor met some conditions.
Speaking at the Berlin air show, Wolf Günther, an economics ministry official with responsibilities for the aerospace industry, said that further government support would only be available if the new investor committed to maintaining Fairchild Dornier's base in Germany.
Braun said that there were also other parties interested in the 728 program. If no agreement can be reached, development of the jet may have to be frozen, he said.
A break-up of the company is looking inevitable but Braun sees nothing wrong with that. "It is definitely possible that individual businesses will be sold to different owners", he said.
The chances of a continuation of the smaller 328 jet were also good, Braun said. Two to three major customers had signalled their interest in continuing the program.
Fairchild Dornier's components business, which mostly serves European aircraft consortium Airbus, had attracted three to four interested investors, he added.
Time is of the essence. Insolvency proceedings will open on July 1, when a credit line of $90 million, extended by the group's principal banks, will run out.