Time Runs Out for Fairchild Dornier

"The hopes of finding a white knight are growing ever more slender," said Günter Pfeiffer, the head of the regional-jet maker's works council.

The company filed for insolvency in April, but it secured a credit of 94 million euro to secure its ongoing operations until the end of June, by when it was hoped that its insolvency administrator, Eberhard Braun, would find a major investor.

With insolvency will come Fairchild Dornier's break-up. And Pfeiffer told Handelsblatt that if the insolvency proceedings go ahead on Monday, as expected, only 1,400 of the 3,600 workers will still have a job with the company. These are the people who will maintain operations in assembly, supply and maintenance.

Around 100 workers will be made redundant, and 2,100 - 2,300 will be taken up into a temporary company, which will pay them 79% of their normal salary for a maximum of three months. The payments will be made partly from the 94 million euro credit and partly by the local labor offices.

Fairchild's hopes really took a nosedive when Canadian aircraft maker Bombardier Inc. decided to abandon talks on taking over the German company's flagship 728/928 program for a 70-seater regional jet.

Fairchild had already invested 1 billion euro in this project, and this - combined with the failure of anticipated sales to materialize in other areas - is what led to the company's financial difficulties.

According to a new report in industry magazine Flight International, the German and Bavarian governments offered 1 billion euro in financial support as an incentive to get Bombardier to take over the 728/928 project.

But this had fallen short of the 1.8 billion euro that the Canadian group had demanded.

Bavaria's finance ministry declined to comment on the figures, and would only refer to "ongoing talks" on the project.

A Fairchild Dornier spokesman said the federal and state governments had both been "very supportive". Farchild said it's still in talks with Italian aviation company Alenia and a Swiss investor group in an effort to save the 728/928 program.

Alenia is seen as the last source of real hope. It has experience in regional-jet production and also holds a 50% stake in ATR, the turboprop-machine producer. The remaining 50% is held by pan-European aerospace giant ADS. A group of experts from the Italian company has been examining the 728 for a week now, but a decision cannot be expected in time for Monday.

"There's nothing to suggest that it will come to final talks," said a Fairchild spokesman.

Meanwhile, there is at least new hope for the Fairchild's division that assembles aircraft components for Airbus. According to Handelsblatt information, MAN AG unit Man-Technologie has shown great interest in the unit.