AvCraft’s German unit falls into bankruptcy

 - January 31, 2007, 7:59 AM

AvCraft Aerospace GmbH, the German subsidiary of AvCraft Aviation of Leesburg, Va., has declared insolvency at a German court at Weilsheim, near the company’s plant at Oberpfaffenhofen airport. The declaration was officially filed in late February, and on March 10 the court appointed attorney Dr. Martin Prager as preliminary insolvency administrator. He will submit a report on AvCraft’s financial and economic situation by April 10.

Prager said the factory continues to operate with the entire staff of 345 people, and that funds for paying salaries are available. The administrator characterized the prospects for finding new investors as fair.

The court’s written decisions show that facility manager Wolfgang Walter and company CEO Ben Bartel each signed the declaration but that it identifies
both men as CEO. Prager said that to date AvCraft has delivered 13 aircraft from inventory and completed two of the partially assembled 328s left on the assembly line by the company’s previous owners. He also mentioned that records show additional orders at hand.

Support Capacity in Question
As AvCraft Aerospace GmbH operates as an entity independent of its parent company, the bankruptcy in Germany does not necessarily signal the demise of the entire group. However, since AvCraft Aviation has proved unable or unwilling to provide funds that would bridge the cash shortage of the German plant, the group will lose its manufacturing unit. Under these circumstances, its capacity to support an estimated 200 aircraft in the worldwide 328 jet and turboprop fleet falls into question.

According to Walter, the cash shortage stems not so much from a market overcrowded with secondhand 328s, but rather from an inventory of aircraft ready for delivery but not accepted by customers. As a worst-case example, Walter cited a 328Jet ordered by Hainan Airlines of China, waiting since last June for payment and delivery. The airplane is a white-tail taken over from Fairchild Dornier inventory and painted in Hainan colors by AvCraft. Of the two 328s completed in February on the old Fairchild Dornier assembly line, one has gone to Club 328 in Britain and one to distributor Aerodienst Nurnberg for delivery to German automobile club ADAC.

Walter told AIN that the Oberpfaffenhofen plant has struggled with undercapitalization since the beginning of operations under AvCraft. It remains to be seen whether the insolvency administrator can find more generous investors and what future role AvCraft Aviation of Leesburg can play in the 328 program–if it survives at all.